<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Survival Technology, Inc.
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(Name of Issuer)
Common Stock, $0.10 par value
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(Title of Class of Securities)
869028100
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James H. Miller (CUSIP Number) Copies to: Stanley Keller, Esq.
President Palmer & Dodge
Brunswick Biomedical Corporation One Beacon Street
6 Thacher Lane, Wareham, MA 02571 (508) 460-9690 Boston, MA 02108
(617) 573-0100
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
April 15, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [X]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1: and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing of this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 869028100 SCHEDULE 13D PAGE 2 OF _ PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BRUNSWICK BIOMEDICAL CORPORATION, A MASSACHUSETTS CORPORATION, 04-3091513
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [X]
2
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
BK, AF, WC, OO
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [_]
5
NOT APPLICABLE
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
MASSACHUSETTS
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SOLE VOTING POWER
7 1,888,126
NUMBER OF
SHARES ------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9 1,888,126
REPORTING
PERSON ------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11 1,888,126
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
NOT APPLICABLE
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
61.1%
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TYPE OF REPORTING PERSON*
14
CO
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*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, $0.10 par value (the "Common
Stock"), of Survival Technology, Inc., a Delaware corporation (the "Issuer").
The principal executive offices of the Issuer are located at 2275 Research
Boulevard, Rockville, Maryland 20850.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed by Brunswick Biomedical Corporation
("Brunswick"), a Massachusetts corporation. Brunswick's principal business
address and principal office are located at 6 Thacher Lane, Wareham,
Massachusetts 02571. Brunswick's business is the development, manufacture and
sale of medical devices. James H. Miller, the President and Chief Executive
Officer of Brunswick, is also the President and Chief Executive Officer of the
Issuer, which also engages in the medical devices business. See Item 1 above.
During the last five years, neither Brunswick nor any of Brunswick's other
directors or executive officers has been (i) convicted in a criminal proceeding
(excluding traffic violations or misdemeanors) or (ii) a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining further violation of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Set forth as Exhibit 1 to this Schedule 13D and incorporated herein by
reference is the following information with respect to each director and
executive officer of Brunswick: (i) name, (ii) business address, (iii) present
principal occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment is conducted,
and (iv) citizenship.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As further described in Item 4, on April 15, 1996, Brunswick purchased
1,888,126 shares of the Issuer's Common Stock (the "Shares") from Robert
Herzstein, Personal Representative of the Estate of Dr. Stanley J. Sarnoff (the
"Seller"), at a purchase price of $11.00 per share or an aggregate purchase
price of $20,769,386. The purchase price was paid in the form of (i) $16,069,386
in cash from Brunswick's working capital and (ii) the delivery of a Subordinated
Promissory Note of Brunswick in the principal amount of $4,700,000 (as more
fully described below), together with warrants to purchase 50,000 shares of
common stock of Brunswick, exercisable at a price of $27.55 per share, subject
to adjustment. Copies of the Stock Purchase Agreement with the Seller, and of
the Warrant, are included in Exhibit 4 attached hereto.
The cash portion of the purchase price was derived from (i) a portion of
the proceeds of a senior bridge loan in the amount of $11,000,000 from
Internationale Nederlanden (U.S.) Capital Corporation (the "Senior Lender");
(ii) the proceeds of a subordinated loan in the amount of $1,000,000 from EM
Industries, Inc., an investor in Brunswick and a customer
<PAGE>
and licensee of the Issuer, and (iii) the balance from the $5,749,960 of
proceeds received upon the sale of 208,710 shares of Brunswick's Series F 10%
Convertible Preferred Stock at a price of $27.55 per share.
The $11,000,000 bridge loan, the terms of which are governed by a credit
agreement between Brunswick and the Senior Lender, as agent for itself and for
lenders who may subsequently become parties to the credit agreement (the "Credit
Agreement"), provides for interest at a variable rate. The bridge loan matures
on October 15, 1996, unless extended until January 15, 1997. Of the loan
proceeds, $1,000,000 is held in a collateral account. Upon the consummation of
the merger described in Item 4 and satisfaction of certain conditions, the
Senior Lender or Lenders have agreed to convert the bridge loan into a
$10,000,000 term loan and to make available a $5,000,000 revolving credit loan,
each of which shall be obligations of the merged entity, shall bear interest at
a variable rate and shall mature on the fifth anniversary of the merger
consummation date. Quarterly principal payments of the term loan will be
required in scheduled amounts ranging from $500,000 to $750,000. In addition,
mandatory prepayments of 75% of excess cash flow will be required on an annual
basis. The bridge loan is secured by substantially all the assets of Brunswick,
including a pledge of the Shares pursuant to a stock pledge agreement (the
"Senior Stock Pledge Agreement"). The term loan and revolving credit loans will
be secured by substantially all of the assets of the merged entity. Copies of
the Credit Agreement, the Bridge Note and the Senior Stock Pledge Agreement are
included in Exhibit 3 hereto.
In connection with the bridge loan, Brunswick has issued two series of
warrants to the Senior Lender to purchase shares of its Class A Common Stock,
one of which is exercisable for 33,370 shares at an initial price of $.01 per
share and the other of which is exercisable for 36,298 shares at an initial
price of $27.55 per share, both subject to adjustment (the "Warrants"). The
Class A Common Stock is a non-voting class of common stock, which otherwise
entitles its holders to the same rights and privileges as the holders of
Brunswick's Common Stock and which, subject to certain restrictions, is
convertible into shares of Brunswick Common Stock on a one for one basis. Under
the terms of the Warrants, upon consummation of the merger of Brunswick with or
into the Issuer, the warrants will be exchanged for warrants exercisable for a
class of non-voting common stock of the Issuer, which will otherwise entitle its
holders to the same rights and privileges as the holders of the Issuer's Common
Stock, and which, subject to certain restrictions, will be convertible into
shares of the Issuer's Common Stock on a one for one basis. The holders of the
Warrants are entitled to certain registration rights for the shares issued upon
conversion of the
<PAGE>
Warrants, as set forth in a Registration Rights Agreement between Brunswick and
the Senior Lender. Copies of the Warrants and related Warrant Purchase
Agreement, and of the Registration Rights Agreement are included in Exhibit 3
hereto.
The $1,000,000 subordinated loan from EM Industries, Inc. matures on the
earlier of December 31, 2001 or the fifth anniversary of any merger of Brunswick
as a result of which Brunswick shareholders receive capital stock or securities
convertible into capital stock registered under the Securities Exchange Act of
1934. The loan is unsecured, and interest accrues on such loan at the rate of
12% per annum through the second anniversary of the closing date and 13% per
annum thereafter. Through April 30, 1998, accrued interest is to be added to
principal and accrues interest. Thereafter, accrued interest is payable monthly
in arrears. Principal on the loan is payable in seven consecutive quarterly
installments of $125,000 beginning on April 30, 1999 and one final payment of
the balance on the maturity date. This loan is subordinated to the loan payable
to the Senior Lender and the Subordinated Promissory Note payable to the Seller.
Copies of the Note Purchase Agreement and Subordinated Promissory Note payable
to EM Industries, Inc. are included in Exhibit 5 hereto.
The Subordinated Promissory Note payable to the Seller in the amount of
$4,700,000 matures on the same day and bears interest at the same rate as the
note payable to EM Industries, Inc. Through April 30, 1998, accrued interest is
to be added to principal and accrues interest. Thereafter, accrued interest is
payable quarterly in arrears. All principal is payable in one payment on the
maturity date. This loan is subordinated to the loan payable to the Senior
Lender and is secured by a pledge of the Shares pursuant to a stock pledge
agreement, junior in priority to the Senior Stock Pledge Agreement in favor of
the Senior Lender (the "Subordinated Stock Pledge Agreement"). Copies of the
Subordinated Promissory Note payable to the Seller and of the Subordinated Stock
Pledge Agreement are included in Exhibit 4 hereto.
ITEM 4. PURPOSE OF TRANSACTION.
The Shares represent approximately 61.1% of the Issurer's outstanding
shares of Common Stock, and were purchased by Brunswick for the purpose of
acquiring control of the Issuer in order to effect a consolidation of the
operations of Brunswick and the Issuer. In this connection, Brunswick is
planning to relocate its operations to the Issuer's principal offices in
Rockville, Maryland in space subleased from the Issuer. Brunswick intends to
propose a merger of Brunswick with or into the Issuer pursuant to which the
stockholders of Brunswick will receive shares of Common Stock of the Issuer in
exchange for their Brunswick shares based on an exchange ratio to be determined
on the basis of the relative values of the shares of Brunswick and the Issuer.
In connection with the foregoing and in order to obtain the approval of the
Issuer's Board of Directors of Brunswick's acquisition of the Shares from the
Seller so that the provisions of Section 203 of the Delaware General Corporation
Law relating to business combinations will not apply to Brunswick (which
approval was obtained on March 15, 1996), Brunswick made certain undertakings
(the "Undertaking") to the Issuer's Board, including the following:
<PAGE>
(i) Until the earlier of the merger or the expiration of three
years, Brunswick will use its best efforts to cause the Issuer to have at
least two qualified independent directors (a director shall not be
considered independent if he or she (i) is or any time within ten years
prior to the date of determination was a director, officer or employee of,
or a consultant, attorney or advisor to, the Issuer (other than persons who
served as independent directors of the Issuer prior to the acquisition) or
Brunswick or (ii) has a direct or indirect material ownership interest in,
or is an officer, director or employee of an organization with a direct or
indirect material ownership interest in, Brunswick);
(ii) During that period, Brunswick and its stockholders will not
enter into agreement, arrangement or transaction with the Issuer (other
than proportionately as a stockholder) unless it is approved by a Special
Committee of the Issuer's Board of Directors consisting solely of at least
two independent directors;
(iii) For a period of three years, Brunswick and its affiliates will
not acquire shares of Common Stock of the Issuer at a price less than the
$11.00 price per share paid to the Seller except to the extent otherwise
approved by a Special Committee; and
(iv) For a period of three years, Brunswick will not engage in
certain business combination transactions with the Issuer, including a
merger, unless the transaction is approved by a Special Committee based on
an investment banker fairness opinion.
Brunswick has asked Messrs. James H. Miller and Bruce M. Dresner, who are
current directors of the Issuer, to continue as directors. The remaining
directors, who will replace the other three directors of the Issurer, each of
whom has resigned, are Messrs. Robert G. Foster, Andrew Grinstead and David L.
Lougee. Messrs. Dresner and Grinstead would be independent directors of the
Issuer for purposes of the foregoing Undertaking. A copy of the Undertaking is
included in Exhibit 2 hereto.
Except as stated above, Brunswick has no plans (i) to change the management
of the Issuer, (ii) to sell or transfer any material amount of assets of the
Issuer or any of its subsidiaries, although it reserves the right to do so in
connection with an ongoing evaluation of the properties and operations of the
post-merger consolidated operations, (iii) to make any material change in the
present capitalization or dividend policy of the Issuer, (iv) to make any other
material change in the Issuer's business or corporate structure, (v) to
change the Issuer's charter or bylaws or to take other actions which may impede
the acquisition of control of the Issuer by any person, (vi) to cause the
Issuer's Common Stock to cease to be authorized to be listed on the Nasdaq
National Market System or to become eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended,
or (vii) to take any action similar to any of the foregoing.
<PAGE>
ITEM 5 INTEREST IN SECURITIES OF THE ISSUER
(a) As a result of the transaction described in Items 3 and 4, Brunswick
beneficially owns 1,888,126 shares of the Issuer's Common Stock, representing
approximately 61.1% of the outstanding shares of Common Stock of the Issuer,
based on the number of shares outstanding (3,088,163) as of April 15, 1996. Mr.
Miller owns, or has the right to acquire within 60 days, 76,035 shares of the
Issuer's Common Stock, representing approximately 2.5% of the outstanding shares
of Common Stock of the Issuer, and consisting of 16,035 shares issued to him as
compensation and options to acquire 75,000 more shares, or which 60,000 are
currently exercisable.
(b) Brunswick has the sole power to vote the shares of Common Stock of the
Issuer owned by it and, subject to the terms of the stock pledge agreements to
the Senior Lender and the Seller, to dispose of such shares. No officers or
directors of Brunswick own any shares of Common Stock of the Issuer, except Mr.
Miller, who has the sole power to vote the shares of Common Stock of the Issuer
beneficially owned by him and to dispose of such shares.
(c) Brunswick has not acquired or disposed of any shares of Common Stock
of the Issuer during the past 60 days, except for the purchase of the Shares
from the Seller described in Item 3 above. No officers or directors of Brunswick
have acquired or disposed of any shares of Common Stock of the Issuer during the
past 60 days.
(d) The Shares purchased from the Seller have been pledged to secure the
senior loan obtained to finance the purchase price and to secure the
Subordinated Promissory Note delivered to the Seller. Upon the occurrence of an
"event of default" under such indebtedness, the Senior Lender or the Seller may
have the power to direct the receipt of dividends upon, or the proceeds from the
sale of, the Shares pursuant to the terms of their respective stock pledge
agreements.
ITEM 6. CONTRACTS, AGREEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Brunswick has registration rights with respect to the Shares to a
Registration Rights Agreement dated September 14, 1990 between the Issuer and
the Seller, which has been assigned to Brunswick in connection with its
purchase of the Shares, and which has been collaterally assigned by Brunswick to
the Senior Lender in connection with the bridge loan. Brunswick's loan
arrangements to finance the purchase of the Shares are described in Item 3
above. The Shares are pledged as security for the senior loan to the Senior
Lender and as security for the Subordinated Promissory Note to the Seller of the
Shares. Certain fees are payable to Vector Securities International, Inc. for
services to Brunswick as financial advisor in connection with the acquisition of
the Shares.
In connection with an investment in Brunswick to finance the purchase of
the Shares from the Seller, Brunswick has agreed with EM Industries, Inc., a
customer and licensee of the Issuer, to use its best efforts to cause the Issuer
to extend the license to EM Industries,
<PAGE>
Inc. relating to the EpiPen product through the year 2010 so long as annual
minimums are met and to grant the licensee certain purchase rights if the Issuer
determines to terminate production of the product or to sell its rights. The
licensee, in turn, has agreed to enter into such extension pending approval by
the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1: Directors and Executive Officers of Brunswick.
Exhibit 2: Brunswick's Undertakings to the Issuer's Board of Directors
Exhibit 3: Senior Loan Documentation:
(a) Credit Agreement
(b) Bridge Note
(c) Senior Stock Pledge Agreement
(d) Warrant Purchase Agreement, together with form of
Series A Warrant and Series B Warrant
(e) Registration Rights Agreement
Exhibit 4: Seller Stock Purchase Documentation:
(a) Stock Purchase Agreement
(b) Warrant
(c) Subordinated Promissory Note
(d) Subordinated Stock Pledge Agreement
Exhibit 5: EM Industries, Inc. Subordinated Loan Documentation:
(a) Note Purchase Agreement
(b) Subordinated Promissory Note
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 25, 1996 BRUNSWICK BIOMEDICAL CORPORATION
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By: /s/James H. Miller
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Name: James H. Miller
Title: President
<PAGE>
EXHIBIT INDEX
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Page
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<S> <C> <C>
Exhibit 1: Directors and Executive Officers of Brunswick.
Exhibit 2: Brunswick's Undertakings to the Issuer's Board
of Directors
Exhibit 3: Senior Loan Documentation:
(a) Credit Agreement
(b) Bridge Note
(c) Senior Stock Pledge Agreement
(d) Warrant Purchase Agreement, together with form of
Series A Warrant and Series B Warrant
(e) Registration Rights Agreement
Exhibit 4: Seller Stock Purchase Documentation:
(a) Stock Purchase Agreement
(b) Warrant
(c) Subordinated Promissory Note
(d) Subordinated Stock Pledge Agreement
Exhibit 5: EM Industries, Inc. Subordinated Loan Documentation:
(a) Note Purchase Agreement
(b) Subordinated Promissory Note
</TABLE>
<PAGE>
EXHIBIT 1
Officers and Directors of Brunswick
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Set forth below is the name, present principal occupation or employment and the
name, principal business and address of any corporation or other orgainization
in which such employment is conducted of each director and executive officer of
Brunswick. Each executive officer and director is a citizen of the United
States of America.
Directors
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James H. Miller
President and Chief Executive Officer
Brunswick Biomedical Corporation
6 Thacher Lane
Wareham, MA 02571
and
President & Chief Executive Officer
Survival Technology, Inc.
2275 Research Boulevard
Rockville, MD 20850
Both companies are in the medical devices business.
Robert G. Foster
Chairman, President and Chief Executive Officer
Commonwealth BioVentures Inc.
Four Milk Street
Portland, ME 04101
Venture capital firm
James G. Nichols
Senior Vice President, General Manager
Brunswick Biomedical Technologies, Inc.
6 Thacher Lane
Wareham, MA 02571
Medical devices business.
Executive Officers
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James H. Miller
President and Chief Executive Officer
(See above)
<PAGE>
EXHIBIT 2
BRUNSWICK BIOMEDICAL CORPORATION
March 15, 1996
Board of Directors
Survival Technology, Inc.
2275 Research Boulevard
Suite 100
Rockville, Maryland 20850
Dear Sirs:
Brunswick Biomedical Corporation ("Brunswick") has informed you that it is
proposing to acquire shares of Common Stock of Survival Technology, Inc. ("STI")
from the Estate of Dr. Stanley J. Sarnoff (the "Estate") which would result in
Brunswick becoming an "interested stockholder" within the meaning of Section 203
of the Delaware General Corporation Law (the "DGCL"). It is a condition of such
acquisition that the Board of Directors of STI (the "Board") approve Brunswick's
acquisition of the STI shares from the Estate so that the provisions of Section
203 will not apply to Brunswick. Brunswick believes that it is in the best
interests of STI and its stockholders for Brunswick to acquire the shares from
the Estate and, in order to assist the Board to approve such acquisition, hereby
makes the following representations, warranties, undertakings and agreements:
1. The information previously furnished to the Board and to STI's
representatives regarding (i) the business and financial condition of Brunswick,
(ii) the identity and background of its stockholders and proposed investors to
fund the acquisition of the Estate's STI shares and (iii) Brunswick's present
plans regarding the conduct of the business of STI and Brunswick following such
acquisition, including without limitation the information furnished to the Board
at its January 11, 1996 meeting, is true and complete in all material respects
and, except to the extent disclosed in writing to the Board at least 48 hours
prior to such acquisition, will be true and complete in all material respects at
the time of such acquisition. In the event of a material change in such
information, the Board may revoke its approval contemplated hereunder prior to
such acquisition.
2. During the Undertaking Period (as defined below), Brunswick will use
its best efforts to cause the Board of Directors of STI to include at least two
qualified independent directors. A director shall not be considered independent
if he or she (i) is or at any time within ten years prior to the date of
determination was a director, officer or employee of, or a consultant, attorney
or advisor to, STI (other than persons who served as independent directors of
STI prior to the acquisition) or Brunswick or (ii) has a direct or indirect
material ownership interest in, or is an officer, director or employee of an
organization with a direct or indirect material ownership interest in,
Brunswick. The persons proposed to be elected as independent directors of STI
have previously been disclosed by Brunswick to the Board, and Brunswick will use
its best efforts during the Undertaking Period to cause such persons to be
<PAGE>
elected and continued in office and, if necessary, to cause suitable
replacements to be elected.
3. During the Undertaking Period, Brunswick will use its best efforts to
not permit STI to terminate the employment of Jeffrey W. Church without Cause
(as such term is defined in the employment agreement between Mr. Church and STI
dated as of January 28, 1994) or to provide Mr. Church with Good Reason (as such
term is so defined).
4. During the Undertaking Period, neither Brunswick nor any of its
stockholders will, directly or indirectly, enter into any agreement, arrangement
or transaction with STI (other than proportionately as a stockholder of STI)
except (i) on terms no less favorable to STI than would be available from a
third party on an arm's-length basis, as may be approved by a Special Committee
or (ii) if the agreement, arrangement or transaction is approved by a Special
Committee as being in the best interests of STI and its stockholders other than
Brunswick.
5. During the Undertaking Period or a period of 36 months from the date
Brunswick becomes an interested stockholder, whichever ends later, Brunswick
will not offer to acquire or acquire, and will use its best efforts to cause STI
and any other affiliate or shareholder of Brunswick and any person acting in
concert with Brunswick to refrain from offering to acquire or acquiring, any
shares of Common Stock of STI outstanding at the date Brunswick becomes an
interested stockholder at a price less than the price paid to the Estate, except
to the extent that (i) Brunswick can demonstrate to the satisfaction of a
Special Committee that a lower price is justified by events or circumstances
occurring subsequent to its acquisition from the Estate, (ii) such acquisition
is pursuant to an agreement existing at the time of Brunswick's acquisition from
the Estate and disclosed to the Board prior to execution hereof or (iii) the
transaction otherwise is approved by a Special Committee as in the best
interests of STI and its shareholders other than Brunswick.
6. For a period of three years from the date it becomes an interested
stockholder, Brunswick will not engage in, and will use its best efforts to
cause STI not to engage in, (i) any merger or consolidation of STI or any
majority-owned subsidiary of STI with or into Brunswick or any affiliate or
shareholder of Brunswick or person acting in concert with Brunswick, (ii) any
sale, lease or exchange of all or substantially all the assets of Brunswick or
STI to the other or any affiliate or shareholder of, or person acting in concert
with, the other or (iii) any other transaction in which the shares of capital
stock of Brunswick are exchanged for or converted into shares of capital stock
or the right to acquire shares of capital stock of STI or the shares of capital
stock of STI are exchanged for or converted into shares of capital stock or the
right to acquire shares of capital stock of Brunswick or any affiliate or
shareholder of Brunswick or person acting in concert with Brunswick, unless in
each case any such transaction is approved by a Special Committee with the
advice and after receipt of an affirmative opinion of an independent, generally
recognized investment banking or similar firm experienced in providing such
advice and rendering "fairness opinions."
- 2 -
<PAGE>
7. The following terms used herein have the meanings specified:
(a) "Special Committee" means a committee of the Board of Directors
of STI consisting solely of independent directors, not less than two in number,
except to the extent a lesser number is available to serve, which shall act by
majority action of its members and shall be authorized to retain, if it chooses,
independent counsel and independent financial advisors.
(b) "Undertaking Period" means the period from the date Brunswick
becomes an interested stockholder of STI and ending on the earlier of (i) the
date Brunswick and STI cease to be separate entities or one becomes a wholly-
owned subsidiary of the other in a transaction effected in compliance with this
Agreement, or (ii) the date which is three years after the date Brunswick
becomes an interested stockholder of STI.
(c) "Interested stockholder" means an interested stockholder of STI
within the meaning of Section 203 of the DGCL as in effect at the time Brunswick
becomes an interested stockholder.
8. Brunswick acknowledges and agrees for the benefit of the directors and
officers of STI (i) that all rights to indemnification and all limitations on
liability existing in favor of the directors, officers and employees of STI and
its subsidiaries as provided in their respective Certificates of Incorporation,
By-Laws or similar governing documents as in effect as of the date of this
Agreement with respect to matters occurring prior to the time of Brunswick's
acquisition of the Estate's shares are contractual in nature and that it will
use its best efforts to cause STI and such subsidiaries to continue such rights
to indemnification and limitations on liability in full force and effect and to
be honored by such entities or their respective successors as if they were the
indemnifying party thereunder, without any amendment thereto, for a period of
not less than six years from such time; provided, however, that all rights to
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indemnification in respect of any claim asserted or made within such period
shall continue until the final disposition of such claim; and (ii) that STI
currently carries directors' and officers' liability insurance and that, in
order not to detract from the coverage currently maintained on behalf of STI's
directors and officers, STI may, and Brunswick will use its best efforts to
cause STI to, provide for a period of no less than six years after the time of
such acquisition directors' and officers' liability insurance substantially
equivalent to that in effect on the date hereof for STI's directors and officers
covering causes of action that arise out of acts or omissions occurring on or
before the date Brunswick becomes an interested stockholder of STI; provided,
--------
however, that STI may elect instead to purchase "tail coverage" or a "discovery
- -------
period" as a substitute for some or all of such insurance. Upon acquiring the
shares of STI Common Stock from the Estate, Brunswick will reimburse STI for the
cost of purchasing such "tail coverage" or "discovery period" as such cost is
payable. STI shall use its best efforts to finance such cost consistent with
its past practice. In the event Brunswick, STI or any of their respective
successors and assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Brunswick or STI, as the case may be, assume the obligations set
forth in this section.
- 3 -
<PAGE>
9. Brunswick agrees for the benefit of the current directors of STI that
any director of STI who is not expected to be a continuing director of STI after
Brunswick's acquisition of the shares of STI Common Stock from the Estate shall
be given the opportunity to resign at the closing of such acquisition, and such
resignation will not be considered removal as a director and will result in the
stock options granted to such director under STI's 1986 Stock Option Plan
remaining outstanding until their otherwise scheduled expiration.
10. Except as otherwise provided, this Agreement is for the benefit of the
Board, STI and its stockholders and shall become binding on Brunswick and its
successors upon the Board approving, for purposes of Section 203 of the DGCL,
Brunswick's acquisition of the shares of STI Common Stock from the Estate and
Brunswick's becoming an interested stockholder of STI, and thereafter this
Agreement shall not be amended without the approval of a Special Committee after
a finding that the amendment does not adversely affect the rights of any person
for whose benefit this Agreement is entered into and is not contrary to the best
interests of STI and its stockholders other than Brunswick.
11. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to agreements made and entirely to
be performed within such jurisdiction, except to the extent federal law may be
applicable.
Very truly yours,
BRUNSWICK BIOMEDICAL CORPORATION
By:/s/ James H. Miller
------------------------------
Title: President
- 4 -
<PAGE>
Exhibit 3(a)
============
================================================================================
CREDIT AGREEMENT
Dated as of April 15, 1996
among
BRUNSWICK BIOMEDICAL CORPORATION
as Borrower,
VARIOUS LENDERS
and
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION,
as Agent for the Lenders
================================================================================
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS..................................... 2
SECTION 1.1 Defined Terms................................... 2
SECTION 1.2 Use of Defined Terms............................ 28
SECTION 1.3 Cross-References................................ 28
SECTION 1.4 Accounting and Financial Determinations......... 28
ARTICLE 2 COMMITMENTS..................................... 29
SECTION 2.1 Bridge Loan..................................... 29
SECTION 2.2 Term Loan and Revolving Loan Commitment......... 29
SECTION 2.2.1 Term Loan....................................... 29
SECTION 2.2.2 Revolving Loan Commitment....................... 29
SECTION 2.2.3 Limitations on Revolving Credit Commitment...... 29
SECTION 2.3 Establishment of Reserves....................... 30
SECTION 2.4 Commitment Fee.................................. 30
SECTION 2.5 Increased Costs; Capital Adequacy............... 30
ARTICLE 3 LOANS AND NOTES................................. 32
SECTION 3.1 Borrowing Procedure............................. 32
SECTION 3.2 Notes........................................... 32
SECTION 3.3 Principal Payments.............................. 33
SECTION 3.3.1 Repayments and Prepayments...................... 33
SECTION 3.3.2 Application..................................... 36
SECTION 3.3.3 Revolving Loans on Borrower's Behalf............ 36
SECTION 3.4 Interest........................................ 36
SECTION 3.4.1 Bridge Loan Rate................................ 36
SECTION 3.4.2 Term Loan Rate.................................. 37
SECTION 3.4.3 Revolving Loan Rate............................. 37
SECTION 3.4.4 Continuation and Conversion Elections........... 37
SECTION 3.4.5 Post-Default Rates.............................. 38
SECTION 3.4.6 Payment Dates................................... 38
SECTION 3.4.7 Rate Determinations............................. 39
SECTION 3.4.8 Limitation on Types of Loans.................... 39
SECTION 3.4.9 Illegality...................................... 39
SECTION 3.4.10 Treatment of Affected Loans..................... 40
SECTION 3.4.11 Compensation.................................... 40
SECTION 3.5 Taxes........................................... 41
SECTION 3.6 Payments, Interest Rate Computations, Other
Computations, etc............................... 42
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 3.7 Proration of Payments........................... 43
SECTION 3.8 Setoff.......................................... 43
SECTION 3.9 Use of Proceeds................................. 43
ARTICLE 4 CONDITIONS TO LOANS............................. 45
SECTION 4.1 Bridge Loan..................................... 45
SECTION 4.1.1 Resolutions, etc................................ 45
SECTION 4.1.2 Bridge Notes.................................... 46
SECTION 4.1.3 Subsidiary Guaranty............................. 46
SECTION 4.1.4 No Contest, etc................................. 46
SECTION 4.1.5 Certificate as to Completed Conditions,
Warranties, No Default, etc..................... 46
SECTION 4.1.6 Opinion of Counsel.............................. 47
SECTION 4.1.7 Closing Fees, Expenses, etc..................... 47
SECTION 4.1.8 Security Documents and Perfection............... 47
SECTION 4.1.9 Employment Agreements; Compensation............. 48
SECTION 4.1.10 Pension and Welfare Liabilities................. 48
SECTION 4.1.11 Insurance....................................... 48
SECTION 4.1.12 Key Man Insurance............................... 49
SECTION 4.1.13 Financial Information, etc...................... 49
SECTION 4.1.14 Solvency, etc................................... 49
SECTION 4.1.15 Acquisition..................................... 49
SECTION 4.2.2 Term Notes and Revolving Notes.................. 52
SECTION 4.2.3 STI Subsidiary Guaranty......................... 52
SECTION 4.2.5 No Contest, etc................................. 52
SECTION 4.2.6 Certificate as to Completed Conditions,
Warranties, No Default, etc..................... 52
SECTION 4.2.7 Opinions of Counsel............................. 53
SECTION 4.2.8 Assumption Agreement............................ 53
SECTION 4.2.9 Security Documents and Perfection............... 53
SECTION 4.2.10 Financial Information, etc...................... 55
SECTION 4.2.11 Solvency, etc................................... 55
SECTION 4.2.12 Merger of Brunswick into STI.................... 56
SECTION 4.2.13 Maturity of Bridge Loan......................... 57
SECTION 4.2.14 Reaffirmation of Representations and Warranties. 57
SECTION 4.2.15 No Dividends; etc............................... 57
SECTION 4.3 All Loans....................................... 57
SECTION 4.3.1 Compliance with Warranties, No Default, etc..... 58
SECTION 4.3.2 Borrowing Request, etc.......................... 58
SECTION 4.3.3 Satisfactory Legal Form......................... 59
SECTION 4.3.4 Margin Regulations.............................. 59
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 4.3.5 Adverse Change.................................. 59
SECTION 4.3.6 Change in Law................................... 59
ARTICLE 5 WARRANTIES, ETC................................. 59
SECTION 5.1 Organization, Power, Authority, etc............. 59
SECTION 5.2 Due Authorization............................... 60
SECTION 5.3 Validity, etc................................... 60
SECTION 5.4 Financial Information; Solvency................. 60
SECTION 5.5 Material Adverse Change......................... 62
SECTION 5.6 Absence of Default.............................. 62
SECTION 5.7 Litigation, Legislation, etc.................... 62
SECTION 5.8 Regulations G, T, U and X....................... 62
SECTION 5.9 Government Regulation........................... 62
SECTION 5.10 Taxes........................................... 63
SECTION 5.11 Pension and Welfare Plans....................... 63
SECTION 5.12 Labor Controversies............................. 65
SECTION 5.13 Ownership of Properties; Collateral............. 65
SECTION 5.14 Intellectual Property........................... 66
SECTION 5.15 Accuracy of Information......................... 66
SECTION 5.16 Insurance....................................... 66
SECTION 5.17 Certain Indebtedness............................ 66
SECTION 5.18 Environmental Matters........................... 67
SECTION 5.19 No Burdensome Agreements........................ 67
SECTION 5.20 Consents........................................ 67
SECTION 5.21 Contracts....................................... 67
SECTION 5.22 Employment Agreements........................... 67
SECTION 5.23 Condition of Property........................... 67
SECTION 5.24 Subsidiaries.................................... 68
SECTION 5.25 Acquisition Agreement........................... 68
SECTION 5.26 Trade Relations................................. 68
ARTICLE 6 COVENANTS....................................... 68
SECTION 6.1 Affirmative Covenants........................... 68
SECTION 6.1.1 Financial Information, etc...................... 69
SECTION 6.1.2 Maintenance of Corporate Existence, etc......... 71
SECTION 6.1.3 Foreign Qualification........................... 71
SECTION 6.1.4 Payment of Taxes, etc........................... 71
SECTION 6.1.5 Insurance....................................... 71
SECTION 6.1.6 Notice of Default, Litigation, etc.............. 72
SECTION 6.1.7 Books and Records............................... 74
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 6.1.8 Maintenance of Properties, Etc.................. 74
SECTION 6.1.9 Maintenance of Licenses and Permits............. 74
SECTION 6.1.10 Employee Plans.................................. 74
SECTION 6.1.11 Environmental Management........................ 75
SECTION 6.1.12 Compliance with Laws............................ 75
SECTION 6.1.13 Interest Rate Protection........................ 75
SECTION 6.1.14 Real Estate..................................... 75
SECTION 6.1.15 Merger of Brunswick into STI.................... 75
SECTION 6.1.16 Cash Reserve Account............................ 76
SECTION 6.1.17. Private Placements.............................. 76
SECTION 6.2 Negative Covenants.............................. 76
SECTION 6.2.1 Business Activities............................. 76
SECTION 6.2.2 Indebtedness.................................... 77
SECTION 6.2.3 Liens........................................... 78
SECTION 6.2.4 Financial Condition............................. 80
SECTION 6.2.5 Capital Expenditures............................ 83
SECTION 6.2.6 Lease Obligations............................... 84
SECTION 6.2.8 Restricted Payments, etc........................ 85
SECTION 6.2.9 Take or Pay Contracts; Sale/Leasebacks.......... 86
SECTION 6.2.10 Consolidation, Merger, Subsidiaries, etc........ 86
SECTION 6.2.11 Asset Dispositions, etc......................... 87
SECTION 6.2.12 Modification of Organic Documents, etc.......... 87
SECTION 6.2.13 Transactions with Affiliates.................... 87
SECTION 6.2.14 Inconsistent Agreements......................... 87
SECTION 6.2.15 Change in Accounting Method..................... 88
SECTION 6.2.16 Change in Fiscal Year End....................... 88
SECTION 6.2.17 Compliance with ERISA........................... 88
SECTION 6.2.18 Limitation on Restrictions on Subsidiary
Dividends....................................... 88
SECTION 6.2.19. Modification of Certain Documents............... 88
SECTION 6.2.20. Prohibition on Voluntary Prepayments on
Subordinated Indebtedness....................... 89
SECTION 6.2.21. Prohibition on Actions Triggering Redemption
of Series D Stock............................... 89
ARTICLE 7 EVENTS OF DEFAULT............................... 89
SECTION 7.1 Events of Default............................... 89
SECTION 7.1.1 Non-Payment of Obligations...................... 89
SECTION 7.1.2 Non-Performance of Certain Covenants............ 90
SECTION 7.1.3 Defaults Under Other Loan Documents;
Non-Performance of Other Obligations............ 90
SECTION 7.1.4 Bankruptcy, Insolvency, etc..................... 90
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 7.1.5 Breach of Warranty.............................. 91
SECTION 7.1.6 Default on Other Indebtedness, etc.............. 91
SECTION 7.1.7 Failure of Valid, Perfected Security Interest... 91
SECTION 7.1.8 Employee Plans.................................. 92
SECTION 7.1.9 Judgments....................................... 92
SECTION 7.1.10 Cessation of Business; Dissolution.............. 93
SECTION 7.1.11 Subordinated Debt Documents..................... 93
SECTION 7.2 Action if Bankruptcy............................ 93
SECTION 7.3 Action if Other Event of Default................ 93
ARTICLE 8 THE AGENT...................................... 93
SECTION 8.2 Funding Reliance, etc........................... 94
SECTION 8.3 Exculpation..................................... 95
SECTION 8.4 Successor....................................... 95
SECTION 8.5 Loans by the Agent.............................. 96
SECTION 8.6 Credit Decisions................................ 96
SECTION 8.7 Copies, etc..................................... 96
ARTICLE 9 MISCELLANEOUS................................... 96
SECTION 9.1 Waivers, Amendments, etc........................ 96
SECTION 9.2 Notices......................................... 98
SECTION 9.3 Costs and Expenses.............................. 99
SECTION 9.4 Indemnification................................. 100
SECTION 9.5 Survival........................................ 101
SECTION 9.6 Severability.................................... 102
SECTION 9.7 Headings........................................ 102
SECTION 9.8 Counterparts, Effectiveness, etc................ 102
SECTION 9.9 Governing Law; Entire Agreement................. 102
SECTION 9.10 Successors and Assigns.......................... 103
SECTION 9.11 Sale and Transfers, Participations, etc......... 103
SECTION 9.12 Other Transactions.............................. 106
SECTION 9.13 Confidentiality................................. 106
SECTION 9.14 Change in Accounting Principles................. 107
SECTION 9.15 Waiver of Jury Trial, Etc....................... 107
SECTION 9.16 Limitation of Liability......................... 107
SECTION 9.17 Usury Savings Clause............................ 108
SECTION 9.18 Effectiveness of Execution and Delivery by STI.. 109
</TABLE>
v
<PAGE>
SCHEDULES AND EXHIBITS
- ----------------------
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Schedule 1 - Disclosure Schedule
Exhibit A - Assumption Agreement
Exhibit B - Borrowing Request
Exhibit C-1 - Bridge Note
Exhibit C-2 - Revolving Note
Exhibit C-3 - Term Note
Exhibit D - Compliance Certificate
Exhibit E - Continuation/Conversion Notice
Exhibit F - Acknowledgment of Interest Rate Contract Counterparty
Exhibit G - Transfer Supplement
Exhibit H - Opinion of Counsel to STI
(to be delivered on the Merger Consummation Date)
</TABLE>
vi
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of April 15, 1996, among BRUNSWICK
BIOMEDICAL CORPORATION, a Massachusetts corporation ("Brunswick"), various
---------
lenders as are, or may become, parties hereto (individually a "Lender" and,
------
collectively, the "Lenders"), and INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
-------
CORPORATION, a Delaware corporation, as Agent for the Lenders.
W I T N E S E T H:
-----------------
RECITALS.
- --------
A. Pursuant to a Stock Purchase Agreement, dated as of March 18,
1996, between Brunswick and the Estate of Dr. Stanley J. Sarnoff, Brunswick has
agreed to acquire 1,888,126 shares of Common Stock, $.10 par value, of Survival
Technology, Inc., a Delaware corporation ("STI");
---
B. After giving effect to such acquisition, Brunswick will seek to
merge with and into STI (the "Merger"), with STI being the surviving corporation
------
and assuming all obligations of Brunswick hereunder;
C. Brunswick desires to obtain from the Lenders (a) a Bridge Loan in
an aggregate principal amount of Eleven Million Dollars ($11,000,000) having an
initial maturity on October 15, 1996, unless extended for an additional ninety-
day period as permitted herein, $10,000,000 of which will be converted, upon
consummation of the Merger, into a Term Loan in the principal amount of Ten
Million Dollars ($10,000,000) having a final maturity on the fifth anniversary
of the Merger; and (b) a Revolving Loan Commitment in an aggregate amount of up
to Five Million Dollars ($5,000,000), pursuant to which Revolving Loans will be
made to the Borrower from time to time from the date of the Merger to but
excluding the Revolving Loan Commitment Termination Date;
D. The Lenders are willing, on the terms and conditions set forth
herein (a) to make such Bridge Loan on the date hereof and (b) upon consummation
of the Merger to convert up to $10,000,000 of the outstanding principal balance
of the Bridge Loan into the Term Loan and to extend the Revolving Loan
Commitment; and
1
<PAGE>
E. The Bridge Loan, the Term Loan and the Revolving Loans will be
used in the manner described in Section 3.9 below;
-----------
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Defined Terms. The following terms (whether or not
-------------
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Acquisition" means the acquisition by Brunswick from the Estate of
-----------
1,888,126 shares of Common Stock, $.10 par value, of STI in exchange for the
payment of the Purchase Price pursuant to the terms and conditions of the
Acquisition Agreement.
"Acquisition Agreement" means that certain Stock Purchase Agreement,
---------------------
dated as of March 18, 1996, between Brunswick and the Estate, as amended,
modified or supplemented to the date hereof.
"Affiliate" of any Person means any other Person which, directly or
---------
indirectly, controls or is controlled by or under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (a)
to vote 5% or more of the securities having ordinary voting power for the
election of directors of such Person, or (b) to direct or cause the direction of
the management or policies of such Person whether by contract or otherwise;
provided that (i) no Lender shall be deemed to constitute an Affiliate of the
- -------- ----
Borrower, and (ii) no member of the Hewson family or their transferees who owns,
directly or indirectly, together with all other members of the Hewson family or
such transferees, 10% or less of the securities having ordinary voting power for
the election of directors of Technology shall be deemed to constitute an
Affiliate of the Borrower or of Technology.
"Agent" means ING as agent for the Lenders pursuant hereto, or such
-----
other Person as shall have subsequently been appointed as the successor agent
pursuant to Section 8.4.
-----------
2
<PAGE>
"Agreement" means, on any date, this Credit Agreement as originally in
---------
effect on the Closing Date and as thereafter from time to time amended,
supplemented, amended and restated, extended or otherwise modified and in
effect.
"Applicable Lending Office" means, with respect to any Lender, the
-------------------------
branch or office of such Lender at which Loans of a certain type are maintained.
"Assumption Agreement" means the Assumption Agreement and Supplement
--------------------
to Pledge and Security Agreement, dated as of the Merger Consummation Date, to
be executed and delivered by STI in favor of the Agent and the Lenders in the
form of Exhibit A.
---------
"Authorized Officer" means, relative to any Loan Party those officers
------------------
of such Loan Party whose signatures, incumbency and authority shall have been
certified to the Agent and the Lenders pursuant to Section 4.1.1 or Section
------------- -------
4.2.1.
- -----
"Base Rate Loans" means Loans, or portions thereof, interest rates on
---------------
which are determined on the basis of the ING Alternate Base Rate.
"Borrower" means, except as otherwise specified in Article 5, (a) at
-------- ---------
all times prior to the Merger Consummation Date, Brunswick, and (b) at all times
on and after the Merger Consummation Date, STI.
"Borrowing" means the Loans or portions thereof of the same type and,
---------
in the case of Eurodollar Loans, having the same Interest Period, in each case
made, converted or continued by the Lenders on the same Business Day pursuant
to the same Borrowing Request or Continuation/Conversion Notice in accordance
with Sections 3.1 or 3.4.4, respectively.
------------ -----
"Borrowing Request" means a loan request and certificate duly executed
-----------------
by an Authorized Officer of the Borrower in the form of Exhibit B.
---------
"Bridge Loan" means, collectively, the loan or loans, in an aggregate
-----------
principal amount of $11,000,000, made by the Lenders on the Closing Date to the
Borrower pursuant to Section 2.1.
-----------
"Bridge Loan Applicable Margin" shall mean (a) 2.50% during the period
-----------------------------
commencing on the Closing Date and ending on the 180th-day following the Closing
Date and (b) 4.00% thereafter.
3
<PAGE>
"Bridge Loan Commitment" means the collective commitments of the
----------------------
Lenders to make the Bridge Loan pursuant to Section 2.1 if the conditions set
-----------
forth in Section 4.1 and Section 4.3
----------- -----------
are met.
"Bridge Note" means a promissory note of the Borrower dated the date
-----------
hereof and substantially in the form of Exhibit C-1, and shall also refer to all
-----------
other promissory notes accepted from time to time in substitution or renewal
thereof.
"Bridge Percentage" of any Lender means at any time, in respect of the
-----------------
Bridge Loan, the percentage set forth opposite such Lender's signature hereto
under the caption "Percentage" as the same may be adjusted pursuant to Section
-------
9.11.
- ----
"Brunswick" means Brunswick Biomedical Corporation, a Massachusetts
---------
corporation.
"Brunswick Patent Assignment" means the Collateral Assignment and
---------------------------
Security Agreement (Patents), dated as of the Closing Date, made by Brunswick in
favor of the Agent, for its benefit and the ratable benefit of the Lenders, as
originally in effect on the Closing Date and as thereafter from time to time
amended, supplemented, amended and restated or otherwise modified and in effect.
"Brunswick Pledge Agreement" means the Stock and Notes Pledge
--------------------------
Agreement, dated as of the Closing Date, made by Brunswick in favor of the
Agent, for itself and the ratable benefit of the Lenders, as originally in
effect on the Closing Date and as thereafter from time to time amended,
supplemented, amended and restated or otherwise modified and in effect, pursuant
to which Brunswick shall pledge to the Agent all of the issued and outstanding
Stock of its direct Subsidiaries held by Brunswick (including, without
limitation, the STI Shares) and all promissory notes and other instruments and
securities held by Brunswick, as security for the Obligations.
"Brunswick Security Agreement" means the Security Agreement, dated as
----------------------------
of the Closing Date, made by Brunswick and each of its Subsidiaries located in
the United States (other than STI and its Subsidiaries and other than the
Inactive Subsidiaries) in favor of the Agent, for its benefit and the ratable
benefit of the Lenders, as originally in effect on the Closing Date and as
thereafter from time to time amended, supplemented, amended and restated or
otherwise modified and in effect.
"Brunswick Subsidiary Guaranty" means the Subsidiary Guaranty, dated
-----------------------------
as of the Closing Date, made by each Subsidiary (other than STI and its
Subsidiaries and other than the
4
<PAGE>
Inactive Subsidiaries) of Brunswick located in the United States in favor of the
Agent and the Lenders, as originally in effect on the Closing Date and as
thereafter from time to time amended, supplemented, amended and restated or
otherwise modified and in effect.
"Brunswick Trademark Assignment" means the Collateral Assignment and
------------------------------
Security Agreement (Trademarks), dated as of the Closing Date, made by Brunswick
in favor of the Agent, for its benefit and the ratable benefit of the Lenders,
as originally in effect on the Closing Date and as thereafter from time to time
amended, supplemented, amended and restated or otherwise modified and in effect.
"Business Day" means:
------------
(a) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in New York, New York;
and
(b) relative to the making, continuing, prepaying or repaying of any
Eurodollar Loans, any day on which dealings in Dollars are carried on in the
London interbank market.
"Capitalized Lease Liabilities" means all monetary obligations of the
-----------------------------
Borrower and its Subsidiaries under any leasing or similar arrangement which, in
accordance with GAAP, are or would be classified as capitalized leases.
"Cash Equivalent Investment" means, at any time:
--------------------------
(a) any direct obligation issued or guaranteed by the United States of
America or any agency or instrumentality thereof and backed by the full faith
and credit of the United States of America, or issued by any state or political
subdivision or public instrumentality thereof, (i) which has a remaining
maturity at the time of purchase of not more than one (1) year or which is
subject to a repurchase agreement with any Lender or any Eligible Lending
Institution exercisable within one (1) year from the time of purchase so long as
such direct obligation remains in the possession of the Borrower or in the
possession of any Lender and (ii) which, in the case of obligations of any state
or political subdivision or public instrumentality thereof, is rated AA or
better by Moody's Investors Service, Inc.;
(b) certificates of deposit, time deposits, demand deposits and
bankers' acceptances, having a remaining maturity at the time of purchase of not
more than one (1) year, issued by any Lender or by any Eligible Lending
Institution;
5
<PAGE>
(c) corporate obligations rated Prime-1 by Moody's Investors Service,
Inc. or A-1 by Standard & Poor's Corporation, having a remaining maturity at the
time of purchase of not more than one (1) year; and
(d) shares of funds registered under the Investment Company Act of
1940, as amended, having assets of at least $100,000,000 which invest only in
obligations described above and which shares are rated by Moody's Investors
Service, Inc. or Standard & Poor's Corporation in one of the two highest rating
categories assigned by such agencies for obligations of such nature.
"Cash Flow" means, for any period, an amount equal to (without
---------
duplication) the consolidated Net Income of the Borrower and its Subsidiaries,
plus depreciation, amortization of intangible assets and other non-cash charges
- ----
of the Borrower and its Subsidiaries, minus non-cash credits and revenues, plus
----- ----
decreases in the Borrower's and its Subsidiaries' working capital (excluding
changes in cash, Cash Equivalent Investments and current maturities of
Indebtedness), minus increases in the Borrower's and its Subsidiaries' working
-----
capital (excluding changes in cash, Cash Equivalent Investments and current
maturities of Indebtedness).
"Cash Reserve Account" means an interest-bearing cash reserve account
--------------------
established by the Borrower at SunTrust Bank, Atlanta in favor of the Agent,
subject to the terms of the Cash Reserve Account Agreement, in which account the
Borrower shall deposit or cause to be deposited on the Closing Date, out of the
proceeds of the Bridge Loan, $1,000,000 and from which account the Agent shall
be irrevocably authorized by the Borrower to withdraw funds sufficient to pay
from time to time accrued and unpaid interest on the Bridge Loan which has
become due and payable.
"Cash Reserve Account Agreement" means the Collateral Account
------------------------------
Agreement, dated as of the Closing Date, between Brunswick, the Agent and
SunTrust Bank, Atlanta, pursuant to which Brunswick shall grant to the Agent a
security interest in the Cash Reserve Account.
"Change in Control" means (a) at any time prior to the Merger
-----------------
Consummation Date, (i) the sale, transfer or other disposition by EM Industries,
Inc. or Mylan Laboratories, Inc. of any shares of Stock held by such Persons as
of the Closing Date other than to an Affiliate of such Person, or (ii) the
failure of James H. Miller (or a Person of comparable qualifications and
experience) to serve as chief executive officer of the Borrower, and (b) from
and after the Merger Consummation Date, (i) the acquisition by any Person or
group of Persons (other than an employee benefit plan solely for employees of
STI and its Subsidiaries) of beneficial ownership of more than 20% of the
outstanding Stock of the Borrower (within the meaning of
6
<PAGE>
Section 13(d) or 14(d) of the Securities and Exchange Act of 1934, as amended,
and the applicable rules and regulations thereunder) other than as a result of
the Merger, (ii) during any period of 12 consecutive months (whether commencing
before or after the Merger Consummation Date), the failure of individuals who on
the first day of such period were directors of the Borrower (together with any
replacement or additional directors who were nominated or elected by a majority
of directors then in office) to constitute a majority of the Board of Directors
of the Borrower, or (iii) the failure of James H. Miller (or a Person of
comparable qualifications and experience) to serve as chief executive officer of
the Borrower.
"Charges" means all federal, state, county, city, municipal, local,
-------
foreign or other governmental (including, without limitation, PBGC) (a) taxes at
the time due and payable and (b) levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the Obligations, (iii)
the Borrower's and its Subsidiaries' employees, payroll, income or gross
receipts, (iv) the Borrower's and its Subsidiaries' ownership or use of their
assets, or (v) any other aspect of the Borrower's and its Subsidiaries'
business.
"Closing Date" means April 15, 1996, the date of the funding of the
------------
Bridge Loan.
"Closing Date Pro Forma Balance Sheet" means the pro forma balance
------------------------------------ --- -----
sheet of Brunswick as of January 31, 1996 prepared by Brunswick based on the
financial statements described in clauses (a)(i) and (ii) of Section 5.4 and
-----------
assuming that the transactions contemplated by this Agreement to occur on the
Closing Date, including the Acquisition and the Bridge Loan, occurred on January
31, 1996.
"Collateral" means all property and interests in property and proceeds
----------
thereof now owned or hereafter acquired by the Borrower or any Subsidiary in or
upon which a Lien is granted to the Agent, for its benefit and the ratable
benefit of the Lenders, under any of the Loan Documents.
"Commitment" means, collectively, the Lenders' Bridge Loan
----------
Commitments, Revolving Loan Commitments and Term Loan Commitments.
"Commitment Letter" means the Commitment Letter dated March 18, 1996
-----------------
between Brunswick and ING.
"Commonly Controlled Entity" means, with respect to any Person, an
--------------------------
entity or trade or business, whether or not incorporated, which is from time to
time a member of a controlled group or a group under common control with such
Person within the meaning of Sections 414(b), 414(c), 414(m) or 414(o) of the
IRC or Section 4001(a)(14) of ERISA. Unless
7
<PAGE>
otherwise indicated in this Agreement, Commonly Controlled Entity shall refer to
a Commonly Controlled Entity with respect to the Borrower.
"Compliance Certificate" means a certificate duly executed by the
----------------------
chief executive, accounting or financial Authorized Officer of the Borrower in
the form of Exhibit D, together with such changes as the Required Lenders may
---------
from time to time reasonably request through the Agent for purposes of
monitoring the Borrower's compliance herewith.
"Consolidated Capital Expenditures" means, for any period, without
---------------------------------
duplication, the sum of (a) the gross dollar amount of additions during such
period to property, plant, equipment and other fixed assets of the Borrower and
its Subsidiaries, including those additions made in the ordinary course of
business, but excluding routine maintenance and repairs, plus (b) the aggregate
----
amount of Capitalized Lease Liabilities incurred during such period by the
Borrower and its Subsidiaries.
"Continuation/Conversion Notice" means a notice of continuation or
------------------------------
conversion and certificate duly executed by the chief executive, accounting or
financial Authorized Officer of the Borrower in the form of Exhibit E attached
---------
hereto.
"Contractual Obligation" means, relative to any Person, any provision
----------------------
of any security issued by such Person or of any Instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Default" means any Event of Default or any condition or event which,
-------
after notice or lapse of time or both, would constitute an Event of Default.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
-------------------
Schedule 1, as it may be amended, supplemented or otherwise modified from time
- ----------
to time by the Borrower with the consent of the Required Lenders as provided in
Section 4.3.2.
- -------------
"Dollar" and the sign "$" mean lawful money of the United States.
------ -
"EBITDA" means, for any period, an amount equal to Net Income plus (to
------ ----
the extent deducted in determining Net Income) interest expense, provisions for
income taxes, depreciation and amortization of intangible assets, in each case
for the Borrower and its Subsidiaries on a consolidated basis.
"Eligible Lending Institution" means a financial institution having a
----------------------------
branch or office in the United States and having capital and surplus and
undivided profits aggregating at
8
<PAGE>
least $100,000,000 and rated Prime-1 or better by Moody's Investors Service,
Inc. or A-1 or better by Standard & Poor's Corporation.
"Environment" means soil, surface waters, ground waters, land,
-----------
streams, sediments, surface or subsurface strata and ambient air.
"Environmental Laws" means all federal, state, local and foreign laws
------------------
or regulations, codes, common law, consent agreements, orders, decrees,
judgments or injunctions issued, promulgated, approved or entered thereunder
relating to pollution or protection of the Environment, natural resource or
occupational health and safety.
"Environmental Liabilities and Costs" means all liabilities,
-----------------------------------
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable fees, disbursements and expenses of counsel, expert and
consulting fees and costs of investigation and feasibility studies), fines,
penalties, settlement costs, sanctions and interest incurred as a result of any
claim or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, any Environmental
Law, permit, order, variance or agreement with a Governmental Authority or other
Person, arising from or related to the administration of any Environmental Law
or arising from environmental, health or safety conditions or a release or
threatened release resulting from the past, present or future operations of the
Borrower or its Subsidiaries or affecting any of their properties, or any
release or threatened release for which the Borrower or any of its Subsidiaries
is otherwise responsible under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute of similar import, together with the
regulation thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"ERISA Insolvency" or "ERISA Insolvent" means, at any particular time,
---------------- ---------------
a Multiemployer Pension Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Estate" means the Estate of Dr. Stanley J. Sarnoff.
------
"Estate Registration Rights Agreement" means the Registration Rights
------------------------------------
Agreement, dated September 14, 1990, between STI and the Estate, pursuant to
which the Estate was granted the right, upon the terms and subject to the
conditions set forth therein, to require STI to register the STI Shares under
the Securities Act of 1933, as amended, which right will be acquired by
9
<PAGE>
Brunswick pursuant to the Acquisition Agreement and collaterally assigned to the
Agent, for its benefit and the ratable benefit of the Lenders, pursuant to
Section 4.1.8(g).
- ----------------
"Estate Stock Pledge Agreement" means the Stock Pledge Agreement,
-----------------------------
dated as of the Closing Date, between the Estate and Brunswick regarding the STI
Shares.
"Estate Subordinated Note" means the Subordinated Promissory Note,
------------------------
dated the Closing Date, made by Brunswick payable to the Estate in the principal
amount of $4,700,000, and delivered by Brunswick to the Estate in partial
payment of the Purchase Price.
"Eurodollar Base Rate" means, with respect to any Borrowing of
--------------------
Eurodollar Loans for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) which appears on Telerate Page
3750 for Dollar deposits comparable to the amount of such Borrowing in the
London interbank market as of 11:00 a.m. London time (or as soon thereafter as
practicable) on the date two (2) Business Days prior to the first day of such
Interest Period having a term comparable to such Interest Period. If such
Telerate Page is unavailable, the "Eurodollar Base Rate" shall mean with respect
--------------------
to any Borrowing of Eurodollar Loans for any Interest Period therefor, the
arithmetic average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of
the rates per annum which appear on the Reuters Screen LIBO Page, or if such
Reuters Screen LIBO Page is unavailable, the "Eurodollar Base Rate" shall mean
--------------------
with respect to any Borrowing of Eurodollar Loans for any Interest Period
therefor, the arithmetic average (rounded upwards, if necessary, to the nearest
1/16 of 1%) of the rates per annum for Dollar deposits comparable to the amount
of such Borrowing offered to each of the Reference Lenders in the London
interbank market as of 11:00 a.m. London time (or as soon thereafter as
practicable) on the date two (2) Business Days prior to the first day of such
Interest Period of Dollar deposits having a term comparable to such Interest
Period.
"Eurodollar Loans" means Loans or portions thereof interest rates on
----------------
which are determined on the basis of the Eurodollar Rate.
"Eurodollar Rate" means, with respect to any Borrowing of Eurodollar
---------------
Loans for any Interest Period therefor, the rate per annum (rounded upward, if
necessary, to the nearest 1/16 of 1%) determined by the Agent to be equal to (i)
the Eurodollar Base Rate for such Borrowing for such Interest Period divided by
----------
(ii) one (1) minus the Reserve Requirement. The Eurodollar Rate for any
Interest Period will be determined initially by the Agent on the basis of the
Reserve Requirement in effect on the date two (2) Business Days prior to the
commencement of such Interest Period and, from time to time thereafter during
such Interest Period, such Eurodollar Rate shall be adjusted automatically on
and as of the effective date of any change in the Reserve Requirement during
such Interest Period.
10
<PAGE>
"Event of Default" means any of the events set forth in Section 7.1.
---------------- -----------
"Excess Cash Flow" means, for any Fiscal Year, the excess of : (a)
----------------
Cash Flow for such Fiscal Year minus (b) the sum of (i) the lesser of the amount
----- ------
of Consolidated Capital Expenditures permitted during such Fiscal Year pursuant
to Section 6.2.5 and actual Consolidated Capital Expenditures during such Fiscal
-------------
Year, plus (ii) scheduled repayments of the Term Loan under clause (c) of
----
Section 3.3.1 during such Fiscal Year and scheduled repayments of other
- -------------
Indebtedness permitted under Section 6.2.2 during such Fiscal Year.
-------------
"Extension Criteria" means (1) all filings and registrations required
------------------
to be made with the Securities and Exchange Commission in connection with the
Merger shall have been submitted and no stop order or other action which would
unreasonably delay or prevent the effectiveness of any such filing or
registration shall exist, (2) all procedural matters related to the Merger shall
have been completed by the respective Boards of Directions of Brunswick and STI,
including, without limitation, approving and authorizing the Merger, and (3) the
Agent, based upon the advice of its counsel, shall have determined to its
satisfaction that there are no material impediments to the orderly consummation
of the Merger.
"Facility Fee Letter" means the letter agreement, dated as of the
-------------------
Closing Date, between ING and the Borrower.
"Fair Saleable Value Balance Sheet" means, with respect to Brunswick
---------------------------------
or STI, as the case may be, a hypothetical balance sheet of such Person,
prepared by such Person based on the Closing Date Pro Forma Balance Sheet or the
--- -----
Merger Pro Forma Balance Sheet, as applicable, setting forth (a) the assets of
--- -----
such Person (restated at the fair saleable value thereof based upon such
evidence of the fair saleable value thereof as such Person shall reasonably deem
pertinent), (b) the liabilities of such Person (including all liabilities and
obligations of such Person, fixed or contingent, direct or indirect, disputed or
undisputed, and whether or not required to be reflected on a balance sheet
prepared in accordance with GAAP), and (c) the excess of such assets over such
liabilities. The amount of attributed contingent liabilities shall be
discounted to reflect the likelihood that such liabilities shall become payable.
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to:
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York; or
11
<PAGE>
(b) if such rate is not so published for any day which is a Business
Day, the arithmetic average of the quotations for such transactions received by
the Agent, in its sole discretion, either from (i) three federal funds brokers
of recognized standing selected by the Agent in its sole discretion or (ii) the
Reference Lenders.
"Financing Statements" means the financing statements under the
--------------------
Uniform Commercial Codes of the applicable jurisdictions, filed with respect to
the Security Documents pursuant to clause (c) of Section 4.1.8 or clause (c) or
-------------
(d) of Section 4.2.9.
-------------
"Fiscal Quarter" means any quarter of a Fiscal Year.
--------------
"Fiscal Year" means, subject to Sections 6.2.16 and 9.14 (b), (a) at
----------- --------------- ---------
any time prior to the Merger Consummation Date, the accounting period of
Brunswick commencing on the Closing Date and ending on June 30, 1996 or, if
Brunswick shall have changed its Fiscal Year end to July 31 as permitted under
Section 6.2.16, July 31, 1996, and each twelve-month accounting period ending
- --------------
June 30 or July 31, as the case may be, thereafter and (b) from and after the
Merger Consummation Date, the accounting period of STI commencing on the Merger
Consummation Date and ending on the first July 31 to occur thereafter, and each
twelve-month accounting period ending on July 31 thereafter. References to a
Fiscal Year with a number corresponding to any calendar year (e.g., the "1996
----
Fiscal Year") refer to the Fiscal Year ending on a date in such calendar year.
"Foreign Lender" means any Lender organized under the laws of a
--------------
jurisdiction outside the United States.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
------------
System (or any successor).
"GAAP" means generally accepted accounting principles in effect from
----
time to time in the United States.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"herein", "hereof", "hereto", "hereunder" and similar terms contained
------ ------ ------ ---------
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, clause or provision of this Agreement or such other Loan Document.
12
<PAGE>
"Inactive Subsidiaries" means, collectively, Brunswick Biomedical
---------------------
Investment Corporation, a Massachusetts corporation, and Pharmapak, Inc., a
Delaware corporation.
"including" means including without limiting the generality of any
---------
description preceding such term.
"Indebtedness" of any Person means, without duplication:
------------
(a) all obligations of such Person for borrowed money (including all
notes payable and drafts accepted representing extensions of credit) and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments on which interest charges are customarily paid;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's acceptances
issued for the account of such Person;
(c) all Capitalized Lease Liabilities of such Person (to the extent
required by GAAP to be included on the balance sheet of such Person);
(d) whether or not so included as liabilities in accordance with GAAP
(i) all obligations of such Person to pay the deferred purchase price of
property or services (excluding trade accounts payable for other than borrowed
money arising in the ordinary course of business) and indebtedness secured by a
Lien on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether
or not such indebtedness shall have been assumed by such Person or is limited in
recourse, and (ii) all obligations of such Person in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise assure
a creditor against loss in respect of, Indebtedness of another Person;
(e) all net obligations of such Person under Interest Rate Contracts;
and
(f) all obligations of such Person to redeem, purchase or otherwise
retire or extinguish any of its Stock at a fixed or determinable date (whether
by operation of a sinking fund or otherwise), at another's option or upon the
occurrence of a condition not solely within the control of such Person (e.g.,
----
redemption from future earnings).
"Indemnified Liabilities" has the meaning set forth in Section 9.4.
----------------------- -----------
13
<PAGE>
"ING" means Internationale Nederlanden (U.S.) Capital Corporation.
---
"ING Alternate Base Rate" means a fluctuating rate of interest per
-----------------------
annum equal to the higher of:
(a) the arithmetic average of rates of interest announced by each of
the Reference Lenders from time to time at such Reference Lender's principal New
York City office as its prime (or base) rate for U.S. domestic commercial loans;
and
(b) the Federal Funds Rate from time to time in effect plus 1/2 of 1%
(0.50%).
Changes in the rate of interest on the Base Rate Loans shall take effect on the
date of each change in the ING Alternate Base Rate. The Agent shall give notice
promptly to the Borrower and the Lenders of changes in the ING Alternate Base
Rate.
"Instrument" means any contract, agreement, letter of credit,
----------
indenture, mortgage, deed, certificate of title, document or writing (whether by
formal agreement, letter or otherwise) under which any obligation is evidenced,
assumed or undertaken, any Lien (or right or interest therein) is granted or
perfected, or any property (or right or interest therein) is conveyed.
"Intellectual Property" means, collectively, (a) patents, patent
---------------------
rights and patent applications, copyrights and copyright applications,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights, applications for registration of trademarks, trade names
and service marks, fictitious names registrations and trademark, trade name and
servicemark registrations, including the names "Brunswick Biomedical
Corporation", "Survival Technology, Inc." and all derivations thereof, and (b)
patent licenses, trademark licenses, copyright licenses and other licenses to
use any of the items described in clause (a), or any other items necessary to
conduct or operate the business of the Borrower and its Subsidiaries.
"Interest Coverage Ratio" means, for any period, the ratio of (a)
-----------------------
EBITDA for such period to (b) Interest Expense during such period.
"Interest Expense" means, for any period, the sum of (a) the
----------------
Borrower's consolidated interest expense accrued during such period in respect
of all Indebtedness of the Borrower and its Subsidiaries, minus (b) the
-----
Borrower's consolidated interest expense accrued during such period in respect
of the Estate Subordinated Note and the Junior Subordinated Note to the extent
that, in accordance with the terms of the Estate Subordinated Note and the
Junior
14
<PAGE>
Subordinated Note, such interest expense is added to the respective principal
amounts thereof and is not paid by the Borrower in cash.
"Interest Period" means, relative to any Eurodollar Loans comprising
---------------
part of the same Borrowing, the period beginning on (and including) the date on
which such Eurodollar Loans are made or continued as, or converted into,
Eurodollar Loans pursuant to Section 3.1 or Section 3.4.4 and ending on (but
----------- -------------
excluding) the date which numerically corresponds to such date one, two, three
or six months thereafter (or, if such month has no numerically corresponding
date, on the last Business Day of such month), in either case as the Borrower
may select in its relevant notice pursuant to Section 3.1 or Section 3.4.4;
----------- -------------
provided, however, that:
- -------- -------
(a) the Borrower shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more than
three (3) dates with respect to the Term Loan and two (2) dates with respect to
the Revolving Loans;
(b) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following Business
Day (unless such next following Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end on the Business Day
next preceding such numerically corresponding date);
(c) in the case of Interest Periods for Revolving Loans, no such
Interest Period may end later than the Stated Maturity Date for Revolving Loans;
and
(d) in the case of Interest Periods for the Term Loan, no such
Interest Period may end later than (i) the Stated Maturity Date of the Term
Loan, or (ii) the date of any principal repayment with respect to the Term Loan
as set forth in clause (c) of Section 3.3.1, if on such date the Borrower
-------------
otherwise would be required to repay any portion of any Borrowing prior to the
end of the Interest Period relative to such Borrowing.
"Interest Rate Contract" means any interest rate cap agreement,
----------------------
interest rate collar agreement, interest rate swap agreement or other agreement
or arrangement designed to protect against fluctuations in interest rates.
"Interest Rate Contract Counterparty" means any counterparty to an
-----------------------------------
Interest Rate Contract which the Borrower is required to enter into pursuant to
Section 6.1.13.
- --------------
"Internal Revenue Service" means the Internal Revenue Service of the
------------------------
United States of America.
15
<PAGE>
"Investment" means, relative to any Person:
----------
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers, employees and
consultants made in the ordinary course of business);
(b) any ownership or similar interest held by such Person in any other
Person; and
(c) the purchase of any debt or equity securities or instruments
issued by any other Person (including, without limitation, Stock, notes,
debentures, drafts and acceptances, trust certificates, partnership interests or
units or membership interests in limited liability companies).
The amount of any Investment of the nature referred to in clause (a) or (b)
shall be the original principal or capital amount thereof less all returns of
principal or equity thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the transfer or exchange
of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
---
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the IRC
also refer to any successor sections.
"Junior Subordinated Note" means the Subordinated Promissory Note,
------------------------
dated the Closing Date, made by Brunswick payable to EM Industries, Inc. in the
principal amount of $1,000,000.
"Lender" means any of the various lenders as are, or may become,
------
parties to this Agreement.
"Lender Parties" means, collectively, the Agent and each Lender, and
--------------
each of their respective successors and assigns, and each of the respective
officers, directors, employees, attorneys and agents of the Agent and each
Lender and of each of their respective successors and assigns, indemnified by
the Borrower as provided in Section 9.4.
-----------
"Lien" means any mortgage, pledge, hypothecation, assignment, charge,
----
deposit arrangement, encumbrance, lien (statutory or other), adverse claim or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including
16
<PAGE>
any conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the UCC or comparable law of any
jurisdiction).
"Loan" means, as the context may require, the Bridge Loan, the Term
----
Loan or the Revolving Loans.
"Loan Documents" means, collectively, this Agreement, the Notes, each
--------------
Security Document, the Brunswick Subsidiary Guaranty, each Borrowing Request,
any Interest Rate Contract entered into by the Borrower with a Lender that has
executed and delivered to the Agent an acknowledgment in the form of Exhibit F,
---------
each other Instrument executed and delivered by the Borrower or any of its
Subsidiaries as of the date hereof or at any time thereafter and, from and after
the Merger Consummation Date, the STI Subsidiary Guaranty, in connection with
the transactions contemplated by this Agreement, in each case, as amended,
modified or supplemented from time to time.
"Loan Party" means any of the Borrower, its Subsidiaries and
----------
Affiliates which is a party to any of the Loan Documents.
"Loss" means any loss, damage, destruction, theft, or seizure of, or
----
any other casualty with respect to, or any condemnation of, any property or
asset of any Person in an amount in excess of $100,000 individually or $250,000
in the aggregate for any Fiscal Year; and the "amount" of any Loss means (i) if
------
such asset or property is repaired or replaced, the greater of (A) the cost to
repair or replace the property or asset that was the subject of such Loss and
(B) the amount of insurance proceeds or condemnation awards payable as a result
of such Loss, and (ii) if such asset or property is not repaired or replaced,
the amount of insurance proceeds or condemnation awards payable as a result of
such loss.
"Material Adverse Change" means a material adverse change in (a) the
-----------------------
condition (financial or otherwise), operations, performance, business,
properties or prospects of the Borrower and its Subsidiaries taken as a whole;
or (b) the rights and remedies of the Lenders or the Agent under the Loan
Documents; or (c) the ability of the Borrower to repay the Obligations or of the
Borrower or any Subsidiary to perform their respective obligations under the
Loan Documents; or (d) the legality, validity or enforceability of any Loan
Document; or (e) the Liens granted the Agent pursuant to the Security Documents.
"Maturity" means relative to any Loan or portion thereof, the earlier
--------
of such Loan's Stated Maturity Date or such other date when such Loan or portion
thereof shall be or
17
<PAGE>
become due and payable in accordance with the terms of this Agreement, whether
by required repayment, prepayment, declaration or otherwise.
"Merger" means the merger of Brunswick with and into STI with STI
------
being the surviving corporation.
"Merger Consummation Date" means the date on which the Merger has been
------------------------
consummated and all conditions set forth in Section 4.2 and Section 4.3 have
----------- -----------
been satisfied or waived in writing by the Lenders and the Agent.
"Merger Pro Forma Balance Sheet" means the pro forma balance sheet of
------------------------------ --- -----
the Borrower as of the Merger Consummation Date, prepared by the Borrower based
upon the financial statements described in clause (a) of Section 5.4, and after
-----------
giving effect to the transactions contemplated by this Agreement to occur on the
Merger Consummation Date, including the consummation of the Merger, the
conversion of $10,000,000 of the Bridge Loan into the Term Loan and the making
of the Revolving Loans to be made on the Merger Consummation Date.
"Monthly Payment Date" means the last day of each calendar month or,
--------------------
if such day is not a Business Day, the immediately preceding Business Day.
"Mortgage" means any mortgage, deed of trust, deed to secure debt,
--------
leasehold mortgage, leasehold deed of trust or leasehold deed to secure debt
covering real property, as such instruments are originally executed or
supplemented, amended, renewed, extended or otherwise modified from time to
time.
"Multiemployer Pension Plan" means a Multiemployer Plan which is
--------------------------
subject to Subtitle E of Title IV of ERISA.
"Multiemployer Plan" means a Plan which is a "multiemployer plan"
------------------
within the meaning of Section 3(37) of ERISA.
"Net Disposition Proceeds" means, with respect to any disposition of
------------------------
the assets of the Borrower or any Subsidiary (including the disposition by
Brunswick of any Stock of STI other than as a result of the Merger), the excess
of: (a) the gross cash proceeds received by the Borrower or any Subsidiary from
such disposition (including any cash proceeds subsequently received in respect
of notes and other non-cash proceeds received by the Borrower or any of its
Subsidiaries from such disposition), minus (b) the sum of (i) all reasonable
-----
out-of-pocket fees
18
<PAGE>
and expenses incurred in connection therewith, plus (ii) all taxes paid or
----
payable in connection with such sale.
"Net Income" means, as to any Person, for any period, the net income
----------
(or loss) of such Person for such period, determined in accordance with GAAP,
but excluding extraordinary gains or losses for such period.
"Net Securities Proceeds" means, with respect to the issuance or sale
-----------------------
by the Borrower or any Subsidiary of any equity or debt securities (not
including upon the exercise of existing stock options or employee stock options,
the issuance of equity securities pursuant to any dividend reinvestment plan or
the incurrence of Indebtedness to finance Consolidated Capital Expenditures to
the extent permitted under Section 6.2.2), the excess of: (a) the gross cash
-------------
proceeds received by the Borrower or any Subsidiary from such issuance and sale;
minus (b) all reasonable out-of-pocket fees and expenses incurred in connection
- -----
with such issuance and sale; minus (c) the amount of such proceeds required to
-----
be applied to the prepayment of the Estate Subordinated Note pursuant to Section
4 of the Estate Subordinated Note as in effect on the Closing Date.
"Note" means, as the context may require, any Bridge Note, Term Note
----
or Revolving Note.
"Notes" means, collectively, the Bridge Notes, the Term Notes and the
-----
Revolving Notes.
"Obligations" means all payment and performance obligations of the
-----------
Loan Parties (monetary or otherwise) arising under or in connection with this
Agreement, the Notes and the other Loan Documents.
"Organic Document" means, relative to any Person, its articles or
----------------
certificate of incorporation or organization or certificate of limited
partnership, its bylaws, partnership or operating agreement or other
organizational documents, and all stockholders agreements, voting trusts and
similar arrangements applicable to any of its Stock or partnership interests or
other ownership interests.
"Participant" means the banks or other entities that purchase
-----------
participating interests in any Loan, Note, Revolving Loan Commitment or other
interest hereunder, as provided in clause (a) of Section 9.11.
------------
19
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
----
succeeding to any or all of its functions under ERISA.
"Pension Plan" means any Plan which is subject to the provisions of
------------
Title IV of ERISA, or to the provisions of Section 302 of ERISA or Section 412
of the IRC.
"Percentage" means, as the context requires, either (a) the Bridge
----------
Percentage, (b) the Revolving Percentage, (c) the Term Percentage or (d) all of
the above.
"Person" means any natural person, corporation, partnership, limited
------
liability company, firm, association, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Plan" shall mean, at a particular time, any employee benefit plan
----
(within the meaning of Section 3(3) of ERISA), which is covered by ERISA and in
respect of which the Borrower, a Subsidiary or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Plan Reorganization" means with respect to any Multiemployer Pension
-------------------
Plan, the condition that such plan is in reorganization within the meaning of
such term as used in Section 4241 of ERISA.
"Plan Reportable Event" means (i) a reportable event described in
---------------------
Section 4043 of ERISA and regulations thereunder (other than any reportable
event described in Section 4043(b)(2) or (7)), (ii) a withdrawal by a
"substantial employer" (within the meaning of Section 4001(a)(2) of ERISA) from
a Single Employer Plan to which more than one employer contributes, as referred
to in Section 4063(b) of ERISA, or (iii) a cessation of operations at a facility
causing more than twenty percent (20%) of participants under a Single Employer
Plan to be separated from employment, as referred to in Section 4062(e) of
ERISA.
"Pledge Agreement" means any of the Brunswick Pledge Agreement or the
----------------
STI Pledge Agreement.
"Post-Default Rate" means (a) in the case of each Loan, the sum of the
-----------------
rate per annum otherwise applicable to such Loan from time to time plus two
----
percent (2%) per annum and (b) in the case of all other Obligations, the sum of
the highest rate per annum then applicable to any Loan (other than by
application of the Post-Default Rate) plus two percent (2%) per annum.
----
20
<PAGE>
"Pro Forma Balance Sheets" means the Closing Date Pro Forma Balance
------------------------ --- -----
Sheet, the Trial Merger Pro Forma Balance Sheet, and the Merger Pro Forma
--- ----- --- -----
Balance Sheet.
"Projections" means the projected balance sheets and statements of
-----------
operations and changes in cash flows of the Borrower (after giving effect to the
Merger) for the Fiscal Years 1997 - 1999 inclusive, prepared by the Borrower on
an annual basis for the 1997 - 1999 Fiscal Years, together with supporting
details and a statement of underlying assumptions, which have been delivered to
the Lenders prior to the Closing Date.
"Purchase Money Indebtedness" means Indebtedness incurred to finance
---------------------------
part or all of (but not more than) the purchase price of equipment in which
neither the Borrower nor any of its Subsidiaries had an interest at any time
prior to such purchase.
"Purchase Price" means "Purchase Price" as that term is defined in the
--------------
Acquisition Agreement.
"Purchasing Lender" means any Person purchasing all or any part of the
-----------------
rights and obligations under this Agreement and the Notes of any Lender pursuant
to a Transfer Supplement in accordance with Section 9.11.
------------
"Quarterly Payment Date" means the last day of each March, June,
----------------------
September and December or, if such day is not a Business Day, the immediately
preceding Business Day.
"Reference Lenders" means, collectively, The Chase Manhattan Bank,
-----------------
N.A., Citibank, N.A. and Morgan Guaranty Trust Company of New York.
"Register" means the register for the recordation of the names and
--------
addresses of the Lenders and the Revolving Loan Commitment of, and the principal
amounts of the Loans owing to, each Lender from time to time, as provided in
clause (c) of Section 9.11.
------------
"Regulatory Approval" means each and every approval, consent, filing
-------------------
and registration by or with any federal, state or other regulatory authority
(domestic or foreign) necessary to authorize or permit the execution, delivery
or performance of this Agreement, the Notes or any other Loan Document, for the
granting of any security contemplated hereby or thereby, for the validity or
enforceability hereof or thereof, or for the consummation of the transaction
contemplated by the Loan Documents, including, without limitation, the
Acquisition and the Merger.
21
<PAGE>
"Regulatory Change" means, as to any or all of the Lenders or the
-----------------
Agent, the adoption of or any change in (including, without limitation, any
change in the interpretation of) any:
(a) United States federal or state law or foreign law applicable to
the Agent or such Lender; or
(b) regulation, interpretation, directive, guideline or request
(whether or not having the force of law) applicable to the Agent or such Lender
of any court or Governmental Authority charged with the interpretation or
administration of any law referred to in clause (a) or of any central bank or
fiscal, monetary or other authority having jurisdiction over the Agent or such
Lender.
"Required Lenders" means, as the context may require at any time,
----------------
Lenders having, in the aggregate, 66-2/3% or more of (a) the Bridge Loans at any
time prior to the Merger Consummation Date, and (b) the Revolving Loan
Commitment, the Revolving Loans and the Term Loan on and after the Merger
Consummation Date.
"Requirements of Law" means, as to any Person, the Organic Documents
-------------------
of such Person, and all federal, state and local laws, rules, regulations,
orders, decrees or other determinations of an arbitrator, court or other
Governmental Authority, including, without limitation, all disclosure and other
requirements of ERISA, the requirements of Environmental Laws and Environmental
Permits, the requirements of OSHA, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its
property is subject.
"Reserve Requirement" means, relative to any Interest Period for any
-------------------
Eurodollar Loans, from time to time during such Interest Period, the reserve
percentage (expressed as a decimal) equal to the maximum aggregate reserve
requirements (including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other scheduled
changes in reserve requirements) specified under regulations issued from time to
time by the F.R.S. Board and then applicable to assets or liabilities consisting
of or including "Eurodollar Liabilities", as currently defined under Regulation
D of the F.R.S. Board, having a term approximately equal or comparable to such
Interest Period.
"Responsible Officer" means the chief executive officer, the chief
-------------------
operating officer and the chief financial officer of the Borrower.
22
<PAGE>
"Revolving Loan" means, relative to any Lender, any loan made by such
--------------
Lender to the Borrower pursuant to Section 2.2.2.
-------------
"Revolving Loan Availability" means, on any date, the excess of (a)
---------------------------
the Revolving Loan Commitment Amount minus (b) the then aggregate principal
-----
amount of all outstanding Revolving Loans.
"Revolving Loan Commitment" means the collective commitments of the
-------------------------
Lenders to make Revolving Loans pursuant to Section 2.2.2 if the conditions set
-------------
forth in Section 4.2 and Section 4.3 are met.
----------- -----------
"Revolving Loan Commitment Amount" means $5,000,000.
--------------------------------
"Revolving Loan Commitment Termination Date" means the earliest of:
------------------------------------------
(a) the Stated Maturity Date for Revolving Loans;
(b) immediately and without further action upon the occurrence of any
Event of Default described in Section 7.1.4;
-------------
(c) immediately when any other Event of Default shall have occurred
and be continuing and either:
(i) the Revolving Loans shall be declared to be due and payable
pursuant to Section 7.3; or
-----------
(ii) in the absence of such declaration, the Agent, acting at the
direction of the Required Lenders, shall give notice to the Borrower that the
Revolving Loan Commitment has been terminated; and
(d) immediately upon the occurrence of a Change in Control.
"Revolving Note" means a promissory note of the Borrower dated the
--------------
date hereof and substantially in the form of Exhibit C-2, and shall also refer
-----------
to all other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
"Revolving Percentage" of any Lender means, at any time, in respect of
--------------------
the Revolving Loan Commitment and the Revolving Loans, the percentage set forth
opposite such
23
<PAGE>
Lender's signature hereto under the caption "Percentage," as the same may be
adjusted pursuant to Section 9.11.
------------
"Secretary" means, with respect to any Person, the secretary,
---------
assistant secretary, clerk, assistant clerk or comparable officer of such
Person.
"Security Documents" means, collectively, the Brunswick Pledge
------------------
Agreement, the Brunswick Security Agreement, the Brunswick Patent Agreement, the
Brunswick Trademark Assignment, the Technology Patent Assignment, the Technology
Trademark Assignment, the Cash Reserve Account Agreement, the assignment of the
Interest Rate Contracts described in Section 6.1.13, the collateral assignment
--------------
of the Estate Registration Rights Agreement described in clause (g) of Section
-------
4.1.8, the collateral assignment of rights under Acquisition Agreement and all
- -----
other documents described in clause (f) of Section 4.1.8, each other Instrument
-------------
at any time delivered in connection with this Agreement to secure the
Obligations and, from and after the Merger Consummation Date, the Assumption
Agreement, the STI Security Agreement, STI Patent Assignment, STI Trademark
Assignment, the STI Pledge Agreement, the Mortgages described in clause (h) of
Section 4.2.9, the Share Charge and the assignment of "key-man" life insurance
- -------------
described in clause (i) of Section 4.2.9.
-------------
"Senior Debt Leverage Ratio" means, for any period, the ratio of (a)
--------------------------
the aggregate outstanding principal amount of the Loans as of the last day of
such period to (b) EBITDA for such period.
"Senior Debt Service" means, for any period, the sum of (a) Interest
-------------------
Expense with respect to the Loans during such period, plus (b) principal
repayments, if any, of the Loans during such period required to be made pursuant
to clause (c) of Section 3.3.1.
-------------
"Senior Debt Service Ratio" means, for any period, the ratio of (a)
-------------------------
EBITDA for such period to (b) Senior Debt Service for such period.
"Share Charge" means the Share Charge, dated the Merger Consummation
------------
Date, made by STI in favor of the Agent, for its benefit and the ratable benefit
of the Lenders, in respect of all of the outstanding shares of STI International
Limited held by STI, in form and substance satisfactory to the Agent.
"Single Employer Plan" means any Plan which is covered by Title IV of
--------------------
ERISA, other than a Multiemployer Plan.
24
<PAGE>
"Solvent" means, with respect to any Person on a particular date, that
-------
on such date (i) the fair value of the assets of such Person (both at fair
valuation and at present fair saleable value) is, on the date of determination,
greater than the total amount of liabilities of such Person (including all
liabilities and obligations of such Person, fixed or contingent, direct or
indirect, disputed or undisputed, and whether or not required to be reflected on
a balance sheet prepared in accordance with GAAP), (ii) such Person is able to
pay all liabilities of such Person as they mature, and (iii) such Person does
not have unreasonably small capital with which to carry on its business. The
amount attributed to contingent liabilities shall be discounted to reflect the
likelihood that such liabilities shall become payable.
"Stated Maturity Date" means, (a) with respect to the Bridge Loan,
--------------------
October 15, 1996, unless the Borrower requests a ninety-day extension in writing
and the Extension Criteria have been met, in which case the Stated Maturity Date
shall be January 15, 1997, and (b) with respect to the Term Loan and the
Revolving Loans, the fifth anniversary of the Merger Consummation Date.
"STI" means Survival Technology, Inc., a Delaware corporation.
---
"STI Patent Assignment" means, collectively, each Collateral
---------------------
Assignment and Security Agreement (Patents), dated as of the Merger Consummation
Date, in substantially the form of the Brunswick Patent Assignment, made by STI
or one of its Subsidiaries in favor of the Agent, for its benefit and the
ratable benefit of the Lenders, as originally in effect on the Merger
Consummation Date and as thereafter from time to time amended, supplemented,
amended and restated or otherwise modified and in effect.
"STI Pledge Agreement" means the Stock and Notes Pledge Agreement,
--------------------
dated as of the Merger Consummation Date, in substantially the form of the
Brunswick Pledge Agreement, made by STI in favor of the Agent, for itself and
the ratable benefit of the Lenders, as originally in effect on the Merger
Consummation Date and as thereafter from time to time amended, supplemented,
amended and restated or otherwise modified and in effect, pursuant to which STI
shall pledge to the Agent all of the issued and outstanding stock of its
Subsidiaries located in the United States and all promissory notes and other
instruments and securities held by STI, as security for the Obligations.
"STI Security Agreement" means the Security Agreement, dated as of the
----------------------
Merger Consummation Date, in substantially the form of the Brunswick Security
Agreement, made by STI and each of its Subsidiaries located in the United States
(other than the Inactive Subsidiaries) in favor of the Agent, for its benefit
and the ratable benefit of the Lenders, as originally in effect
25
<PAGE>
on the Merger Consummation Date and as thereafter from time to time amended,
supplemented, amended and restated or otherwise modified and in effect.
"STI Subsidiary Guaranty" means the Subsidiary Guaranty, dated as of
-----------------------
the Merger Consummation Date, in substantially the form of the Brunswick
Subsidiary Guaranty, made by each Subsidiary (other than the Inactive
Subsidiaries) of STI located in the United States in favor of the Agent and the
Lenders, as originally in effect on the Merger Consummation Date and as
thereafter from time to time amended, supplemented, amended and restated or
otherwise modified and in effect.
"STI Shares" means the 1,888,126 shares of Common Stock, $.10 par
----------
value, of STI purchased by Brunswick pursuant to the Acquisition Agreement.
"STI Trademark Assignment" means, collectively, each Collateral
------------------------
Assignment and Security Agreement (Trademarks), dated as of the Merger
Consummation Date, in substantially the form of the Brunswick Trademark
Assignment, made by STI or one of its Subsidiaries in favor of the Agent, for
its benefit and the ratable benefit of the Lenders, as originally in effect on
the Merger Consummation Date and as thereafter from time to time amended,
supplemented, amended and restated or otherwise modified and in effect.
"Stock" means all shares of capital stock of or in a corporation,
-----
whether voting or non-voting, and including, without limitation, common stock
and preferred stock.
"Subsidiary" of any corporation means any other corporation greater
----------
than 50% of the outstanding shares of Stock of which having ordinary voting
power for the election of directors is owned directly or indirectly by such
corporation, and, except as otherwise indicated herein, references to
Subsidiaries shall refer to Subsidiaries of the Borrower. Unless otherwise
indicated, references to Subsidiaries of Brunswick on the Closing Date and as of
any time thereafter, but prior to the Merger Consummation Date, shall include
STI and its Subsidiaries.
"Subsidiary Note" means a promissory note made by a Subsidiary payable
---------------
to the Borrower and meeting the requirements of Section 6.2.7(e).
----------------
"Taxes" means all taxes, levies, imposts, deductions, charges or
-----
withholdings, and all liabilities with respect thereto, excluding, in the case
---------
of each Lender and the Agent, taxes imposed on or measured by its net income and
franchise taxes imposed on it.
"Technology" means Brunswick Biomedical Technologies, Inc., a
----------
Massachusetts corporation and a Subsidiary of the Borrower.
26
<PAGE>
"Technology Patent Assignment" means the Collateral Assignment and
----------------------------
Security Agreement (Patents), dated as of the Closing Date, made by Technology
in favor of the Agent, for its benefit and the ratable benefit of the Lenders,
as originally in effect on the Closing Date and as thereafter from time to time
amended, supplemented, amended and restated or otherwise modified and in effect.
"Technology Trademark Assignment" means the Collateral Assignment and
-------------------------------
Security Agreement (Trademarks), dated as of the Closing Date, made by
Technology in favor of the Agent, for its benefit and the ratable benefit of the
Lenders, as originally in effect on the Closing Date and as thereafter from time
to time amended, supplemented, amended and restated or otherwise modified and in
effect.
"Term Loan" means, collectively, the loans, in an aggregate principal
---------
amount equal to $10,000,000, to be converted from $10,000,000 of the outstanding
principal balance of the Bridge Loan on the Merger Consummation Date pursuant to
Section 2.2.1.
- -------------
"Term Loan Commitment" means the collective commitments of the Lenders
--------------------
to extend the Term Loan pursuant to Section 2.2.1 by converting $10,000,000 of
-------------
the outstanding principal balance of the Bridge Loan into the Term Loan on the
Merger Consummation Date if the conditions set forth in Section 4.2 and Section
----------- -------
4.3 are met.
- ---
"Term Note" means a promissory note of the Borrower dated the date
---------
hereof and substantially in the form of Exhibit C-3, and shall also refer to all
-----------
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"Term Percentage" of any Lender means, at any time, in respect of the
---------------
Term Loan, the percentage set forth opposite such Lender's signature hereto
under the caption "Percentage," as the same may be adjusted pursuant to Section
-------
9.11.
- ----
"Total Debt Leverage Ratio" means, for any period, the ratio of (a)
-------------------------
the aggregate outstanding principal amount of all Indebtedness of the Borrower
and its Subsidiaries as of the last day of such period to (b) EBITDA for such
period.
"Transfer Supplement" means a Transfer Supplement, substantially in
-------------------
the form of Exhibit G, executed pursuant to Section 9.11.
--------- ------------
"Trial Merger Pro Forma Balance Sheet" means the pro forma balance
------------------------------------ --- -----
sheet of the Borrower, assuming the Merger will occur on August 1, 1996,
prepared by Brunswick based
27
<PAGE>
on the financial statements described in clauses a(i)-(iv) of Section 5.4 and
-----------
the Projections and after giving effect to the transactions contemplated to
occur on the Closing Date.
"type" means, relative to any Borrowing or Loan, the portion thereof
----
being maintained as a Base Rate Loan or a Eurodollar Rate Loan.
"UCC" means the Uniform Commercial Code of any applicable
---
jurisdiction, as in effect from time to time.
"United States" or "U.S." means the United States of America, its 50
------------- ----
States and the District of Columbia.
"Written" or "in writing" means any form of written communication or a
------- ----------
communication by means of telephonic facsimile device.
SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the
--------------------
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and each
Note, Borrowing Request, Compliance Certificate, Continuation/Conversion Notice,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.
SECTION 1.3 Cross-References. Unless otherwise specified,
----------------
references in this Agreement and in each other Loan Document to any Article or
Section are references to such Article or Section of this Agreement or such
other Loan Document, as the case may be, and unless otherwise specified,
references in any Article, Section, or definition to any clause are references
to such clause of such Section, Article or definition.
SECTION 1.4 Accounting and Financial Determinations. Unless
---------------------------------------
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder shall be made, and all financial statements required to
be delivered hereunder or thereunder shall be prepared in accordance with GAAP.
28
<PAGE>
ARTICLE 2
COMMITMENTS
SECTION 2.1 Bridge Loan. Subject to the terms and conditions of this
-----------
Agreement, each Lender severally and for itself alone agrees to make a single
Loan to the Borrower on the Closing Date equal to its Bridge Percentage of
$11,000,000.
SECTION 2.2 Term Loan and Revolving Loan Commitment. Subject to the
---------------------------------------
terms and conditions of this Agreement, each Lender severally and for itself
alone agrees to make its Term Percentage of the Term Loan described in Section
-------
2.2.1 and to provide its Revolving Percentage of the Revolving Loan Commitment
- -----
described in Section 2.2.2.
-------------
SECTION 2.2.1 Term Loan. On the Merger Consummation Date, each
---------
Lender will convert a portion of the Bridge Loan equal to its Term Percentage of
$10,000,000, which portion shall thereafter constitute such Lender's portion of
the Term Loan.
SECTION 2.2.2 Revolving Loan Commitment. Each Lender will, from time
-------------------------
to time on any Business Day occurring during the period commencing on the Merger
Consummation Date and continuing to (but not including) the Revolving Loan
Commitment Termination Date, make Revolving Loans to the Borrower equal to its
Revolving Percentage of the aggregate amount of any Borrowing of Revolving Loans
requested by the Borrower to be made on such Business Day in accordance with
Section 3.1.
- -----------
SECTION 2.2.3 Limitations on Revolving Credit Commitment. No Lender
------------------------------------------
shall be required to make any Revolving Loan, if after giving effect thereto:
(a) the then aggregate outstanding principal amount of all Revolving
Loans would exceed the Revolving Loan Commitment Amount less the amount of
reserves established by the Agent pursuant to Section 2.3; or
-----------
(b) the then aggregate outstanding principal amount of such Lender's
Revolving Loans would exceed its Revolving Percentage of an amount equal to the
Revolving Loan Commitment Amount less the amount of reserves established by the
Agent pursuant to Section 2.3.
-----------
Subject to the terms hereof, the Borrower may from time to time borrow, prepay
and reborrow Revolving Loans, in all cases pursuant to the Revolving Loan
Commitment.
29
<PAGE>
SECTION 2.3 Establishment of Reserves. The Agent shall have the
-------------------------
right to establish, in such amounts, and with respect to such matters, as the
Agent, based on the Agent's customary credit considerations, shall deem
necessary or appropriate, reserves with respect to (i) Charges and Liens; (ii)
Environmental Liabilities and Costs, (iii) sums as to which the Agent and the
Lenders are permitted to make Revolving Loans on the Borrower's behalf under
Section 3.3.3 of this Agreement; and (iv) by thirty (30) days prior written
- -------------
notice by the Agent to the Borrower, such other matters, events, conditions or
contingencies as to which the Agent, based on the Agent's customary credit
considerations, reasonably determines reserves should be established from time
to time hereunder.
SECTION 2.4 Commitment Fee. The Borrower agrees to pay to the Agent,
--------------
for the account of each Lender, a nonrefundable fee for the period from the
Closing Date to and including the Revolving Loan Commitment Termination Date,
equal to such Lender's Revolving Percentage of one-half of one percent (0.50%)
per annum of the difference between (A) the Revolving Loan Commitment Amount and
(B) the average daily aggregate outstanding principal amount of all Revolving
Loans. The fee described in this Section 2.4 shall be calculated on a daily
-----------
basis and shall be payable by the Borrower in arrears on each Monthly Payment
Date and on the Revolving Loan Commitment Termination Date.
SECTION 2.5 Increased Costs; Capital Adequacy. (a) The Borrower
---------------------------------
shall pay to each Lender from time to time on demand such amounts as such Lender
may determine to be reasonably necessary to compensate it or its holding company
for any costs which such Lender determines are attributable to its making or
maintaining Loans, or maintaining Commitments hereunder or its obligation to
make any such Loans hereunder, or any reduction in any amount receivable by such
Lender hereunder in respect of any such Loans, Commitments or obligation, in
each case resulting from any Regulatory Change which: (i) changes the basis of
taxation of any amounts payable to such Lender under this Agreement in respect
of any of such Loans or Commitments (other than taxes imposed on or measured by
the overall net income of such Lender or of its Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit, deposit insurance or
assessment, minimum capital, capital ratio or similar requirements relating to
any extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender or any holding company of such bank (including,
without limitation, a request or requirement which affects the manner in which
any Lender or the holding company of any thereof allocates capital resources to
commitments, including the Commitments and obligations of such Lender
hereunder). Each Lender will notify the Borrower of any event occurring after
the date of this Agreement which will entitle such Lender to compensation
pursuant to this clause (a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation.
30
<PAGE>
(b) Without limiting the effect of the foregoing provisions of this
Section 2.5 (but without duplication), the Borrower shall pay to each Lender
- -----------
from time to time upon demand by such Lender such amounts as the Lender may
determine to be reasonably necessary to compensate such Lender for any costs
which it determines are attributable to the maintenance by it or its holding
company, pursuant to any law or regulation of any jurisdiction or any
interpretation, directive or request (whether or not having the force of law) of
any court or governmental or monetary authority, whether in effect on the date
of this Agreement or thereafter, of capital in respect of its Loans its
obligation to make the Loans hereunder (such compensation to include, without
limitation, an amount equal to any reduction in return on assets or equity of
such Lender or its holding company to a level below that which it could have
achieved but for such law, regulation, interpretation, directive or request).
The Lender will notify the Borrower with a copy to the Agent) if it is entitled
to compensation pursuant to this clause (b) as promptly as practicable after it
determines to request such compensation.
(c) Each notice delivered by any Lender pursuant to this Section 2.5
-----------
shall contain a statement of such Lender as to any such additional amount or
amounts (including calculations thereof in reasonable detail) which shall, in
the absence of manifest error, be conclusive of the matters stated therein and
be binding upon the Borrower. In determining such amount, any Lender may use
any method of averaging and attribution that it in good faith shall deem
applicable.
(d) Upon the receipt by the Borrower from any Lender of a claim for
compensation pursuant to this Section 2.5, the Borrower may obtain a replacement
-----------
bank, financial institution or other lender satisfactory to the Borrower and the
Agent to acquire and assume all or part of such affected Lender's Loans and
Commitments and such affected Lender shall transfer all or such part of its
Loans and Commitments upon receipt of the purchase price therefor (which shall
equal the outstanding principal amount of its Loans plus all accrued and unpaid
interest and fees to the date of purchase, plus all other amounts owing by the
Borrower) to such affected Lender under this Agreement. Any such replacement
bank, financial institution or other lender shall be subject to the prior
written consent of the Agent, which consent shall not be unreasonably withheld.
31
<PAGE>
ARTICLE 3
LOANS AND NOTES
SECTION 3.1 Borrowing Procedure. By delivery of a Borrowing Request
-------------------
to the Agent on or before 11:00 a.m., New York City time, on any day, the
Borrower may request that the Bridge Loan be made on such day. By delivering a
Borrowing Request to the Agent at the Agent's Atlanta Office on or before 11:00
a.m., New York City time, on a Business Day, the Borrower may (a) request, on
not less than one (1) Business Day's advance notice in the case of Base Rate
Loans and not less than three (3) Business Days' advance notice in the case of
Eurodollar Loans, that the Term Loan be made on the Merger Consummation Date;
and (b) from time to time request, on not less than one (1) nor more than three
(3) Business Days' notice, in the case of Base Rate Loans, and not less than
three (3) nor more than five (5) Business Days' notice in the case of Eurodollar
Loans, that a Borrowing of Revolving Loans be made on the Business Day specified
in such Borrowing Request. Borrowings of Base Rate Loans shall be in a minimum
aggregate amount equal to $250,000 and in integral multiples of $50,000 or, if
less, the amount of the Revolving Loan Availability immediately prior to such
Borrowing. Borrowings of Eurodollar Loans shall be in a minimum aggregate
amount of $500,000 and in integral multiples of $100,000. The Term Loan shall
be made on the Merger Consummation Date, and each Revolving Loan shall be made
on the Business Day specified in the Borrowing Request therefor, which Business
Day shall be on or after the Merger Consummation Date. On such Business Day,
each Lender shall, on or before 2:00 p.m., New York City time, deposit same day
funds with the Agent in an amount equal to such Lender's Percentage of the
requested Borrowing, such deposit to be made to such account as the Agent shall
specify from time to time by notice to the Lenders. The proceeds of all
Borrowings shall be made available to the Borrower by wire transfer of such
proceeds to such transferees, or to such accounts of the Borrower, as the
Borrower shall have specified in the Borrowing Request therefor; provided,
--------
however, that in each case the Agent shall be required to make available to the
- -------
Borrower the proceeds of any Borrowing only to the extent received by it in same
day funds from the Lenders. No Lender's obligation to make any Loan shall be
affected by any other Lender's failure to make any Loan.
SECTION 3.2 Notes. All Loans made by each Lender shall be evidenced:
-----
(a) in the case of such Lender's portion of the Bridge Loan, by a
Bridge Note payable to the order of such Lender in a principal amount equal to
such Lender's Bridge Percentage of the Bridge Loan;
32
<PAGE>
(b) in the case of such Lender's portion of the Term Loan, by a Term
Note payable to the order of such Lender in a principal amount equal to such
Lender's Term Percentage of the Term Loan; and
(c) in the case of such Lender's Revolving Loans, by a Revolving Note
payable to the order of such Lender in a principal amount equal to such Lender's
Revolving Percentage of the Revolving Loan Commitment Amount.
The Borrower hereby irrevocably authorizes each Lender to make (or cause to be
made) appropriate notations on a grid schedule attached to such Lender's
Revolving Note (or on a continuation of any such grid attached to any Revolving
Note and made a part thereof), which notations shall evidence, inter alia, the
----------
date and outstanding principal amount of the Revolving Loans evidenced thereby.
The notations on any such grid (and on any such continuation) indicating the
outstanding principal amount of such Lender's Revolving Loans shall be
presumptive evidence of the principal amount thereof owing and unpaid, but the
failure to record any such amount on any such grid (or on any such continuation)
shall not limit or otherwise affect the obligations of the Borrower hereunder or
under such Note to make payments of principal of or interest on such Loans when
due.
SECTION 3.3 Principal Payments. Repayments and prepayments of
------------------
principal of the Loans shall be made in accordance with this Section 3.3.
-----------
SECTION 3.3.1 Repayments and Prepayments. The Borrower will make
--------------------------
payment in full of all unpaid principal of each Loan at its Stated Maturity Date
(or such earlier date as such Loan may become or be declared due and payable
pursuant to Article 7). Prior thereto, the Borrower:
---------
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; provided, however, that (i) as to partial prepayments of the Bridge Loan
-------- -------
or the Term Loan, all such voluntary prepayments shall require at least three
(3) Business Days prior notice to the Agent, (ii) as to the Bridge Loan, the
Term Loan and the Revolving Loans, all such voluntary prepayments shall be in a
minimum amount of $50,000 (subject to the Borrower's right to prepay in full the
entire unpaid principal amount of the Bridge Loan, the Term Loan or the
Revolving Loans, as the case may be), and (iii) as to the voluntary prepayment
in full of the Bridge Loan and the Term Loan and the termination of the
Revolving Loan Commitment, such prepayment shall require at least five (5)
Business Days prior written notice to the Agent;
33
<PAGE>
(b) shall, on any Business Day on which the aggregate outstanding
principal amount of all Revolving Loans exceeds the Revolving Loan Commitment
Amount, make a mandatory prepayment of the outstanding principal amount of
Revolving Loans in an amount equal to such excess amount;
(c) shall, on each Quarterly Payment Date, commencing on the third
(3rd) Quarterly Payment Date occurring after the Merger Consummation Date, make
a scheduled payment of a portion of the outstanding principal amount of the Term
Loan in an amount equal to the lesser of (i) the outstanding principal balance
------
of the Term Loan, and (ii) the amount shown below opposite each such Quarterly
Payment Date:
<TABLE>
<CAPTION>
Quarterly
Quarterly Payment Dates Occur- Principal
ring During the Period from: Payment
- ------------------------------ --------
<S> <C>
Merger Consummation Date through but
excluding the first anniversary of the
Merger Consummation Date $250,000
First anniversary of the Merger Consummation
Date through but excluding the second
anniversary of the Merger Consummation Date $500,000
Second anniversary of the Merger Consummation
Date through but excluding the third
anniversary of the Merger Consummation Date $500,000
Third anniversary of the Merger Consummation
Date through but excluding the fourth
anniversary of the Merger Consummation Date $625,000
Fourth anniversary of the Merger Consummation
Date through and including the Stated Maturity
Date for the Term Loan $750,000
</TABLE>
(d) shall, concurrently with the receipt by the Borrower or any
Subsidiary of any Net Disposition Proceeds (other than from dispositions of
assets permitted under clause (a) of Section 6.2.11) which in the aggregate
--------------
equal or exceed $250,000 in any Fiscal Year, if received prior to the Merger
Consummation Date, make a mandatory prepayment of the Bridge
34
<PAGE>
Loan, and if received after the Merger Consummation Date, make a mandatory
prepayment of the Term Loan, in each case in an aggregate amount equal to such
Net Disposition Proceeds; provided that this clause (d) of Section 3.3.1 shall
-------- -------------
not in any event be deemed a consent to any disposition by the Borrower or any
Subsidiary which is otherwise prohibited by the terms of this Agreement or of
any of the other Loan Documents;
(e) shall, concurrently with the receipt by the Borrower or any
Subsidiary of any Net Securities Proceeds, if received prior to the Merger
Consummation Date make a mandatory prepayment of the Bridge Loan, and if
received after the Merger Consummation Date make a mandatory prepayment of the
Term Loan, in each case in an aggregate amount equal to such Net Securities
Proceeds; provided that this clause (e) of Section 3.3.1 shall not in any event
-------- -------------
be deemed a consent to any issuance of Stock or the incurrence of Indebtedness
by the Borrower or any Subsidiary which is otherwise prohibited by the terms of
this Agreement or of any of the other Loan Documents;
(f) shall, concurrently with the delivery of the financial information
required under clause (a)(i) of Section 6.1.1 (but in no event later than the
-------------
date such information is required to be delivered), make a mandatory prepayment
of a portion of the outstanding principal amount of the Term Loan in an amount
equal to 75% of Excess Cash Flow for the Fiscal Year with respect to which such
financial information was delivered or is required to be delivered;
(g) shall, within 180 days after receipt by the Borrower or any
Subsidiary or the Agent of any condemnation awards with respect to any Loss,
make a mandatory prepayment of the Loans in an amount by which such condemnation
awards exceed the actual cost incurred to replace or restore the property or
asset which was the subject of such Loss as nearly as practicable to conditions
prior to such Loss;
(h) shall, within 180 days after receipt by the Borrower or any
Subsidiary or the Agent of any insurance proceeds with respect to any Loss
resulting from a casualty, make a mandatory prepayment of the Loans in an amount
by which such insurance proceeds exceed the actual cost incurred by the Borrower
or such Subsidiary to repair or replace the property or asset which was the
subject of the Loss or deemed Loss giving rise to such insurance proceeds;
(i) shall, within 180 days after receipt by the Borrower or any
Subsidiary or the Agent of any insurance proceeds with respect to any Loss
resulting from a liability, make a mandatory prepayment of the Loans in an
amount by which such insurance proceeds exceed the amount of the liability to be
satisfied with such proceeds (to the extent such liability is so satisfied);
35
<PAGE>
(j) shall, concurrently with the receipt by the Borrower of any
proceeds of the life insurance policies described in clause (c) of Section
-------
6.1.5, make a mandatory prepayment of the Loans in an amount equal to the amount
- -----
of such insurance proceeds;
(k) shall, concurrently with the receipt by the Borrower of any amount
payable by the Estate to the Borrower pursuant to or as a result of the breach
by the Estate of the Acquisition Agreement, make a mandatory prepayment in an
aggregate amount equal to the amount so received;
(l) shall, on the earlier of the Merger Consummation Date or the
Stated Maturity Date for the Bridge Loan, repay the Bridge Loan in an amount
equal to the cash balance on deposit in the Cash Reserve Account on such date
(and the Borrower hereby irrevocably authorizes and directs the Agent to apply
such cash balance for such purpose); and
(m) shall prepay the entire outstanding principal amount of the Loans
together with accrued and unpaid interest and all of the outstanding Obligations
hereunder upon the occurrence of a Change in Control.
SECTION 3.3.2 Application. Each prepayment or repayment of principal
-----------
required under clauses (d) through (k) of Section 3.3.1 prior to the Merger
-------------
Consummation Date shall be applied to the Bridge Loan and, subsequent to the
Merger Consummation Date, shall be applied in inverse order to the scheduled
installments due on the Term Loan under clause (c) of Section 3.3.1.
-------------
SECTION 3.3.3 Revolving Loans on Borrower's Behalf. The Lenders are
------------------------------------
authorized to, and at their option may, make Revolving Loans on behalf of the
Borrower for payment of all fees, expenses, charges, costs, principal and
interest owed by the Borrower to the Lenders or the Agent under this Agreement
and the other Loan Documents. Such Revolving Loans shall be made when and as
the Borrower fails promptly to pay same, and all such Revolving Loans shall
constitute Revolving Loans made to the Borrower and shall be secured by all of
the Collateral.
SECTION 3.4 Interest. Interest on the outstanding principal amount
--------
of the Loans and other outstanding Obligations shall accrue and be payable in
accordance with this Section 3.4.
-----------
SECTION 3.4.1 Bridge Loan Rate. Subject to Section 3.4.5, the Bridge
---------------- -------------
Loan shall accrue interest at a rate per annum equal to the ING Alternate Base
Rate (as in effect from time to time) plus the Bridge Loan Applicable Margin.
----
36
<PAGE>
SECTION 3.4.2 Term Loan Rate. Subject to Section 3.4.5, the Term
-------------- -------------
Loan or any portion thereof shall accrue interest at the following rates per
annum, at the election of the Borrower, pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice:
(a) during such periods as the Term Loan or portion thereof is a Base
Rate Loan, the ING Alternate Base Rate (as in effect from time to time) plus
----
1.50%, and
(b) during such periods as the Term Loan or portion thereof is a
Eurodollar Loan, for each Interest Period relating thereto, the Eurodollar Rate
for and Interest Period plus 3.50%.
----
SECTION 3.4.3 Revolving Loan Rate. Subject to Section 3.4.5,
------------------- -------------
Borrowings of Revolving Loans shall accrue interest at the following rates per
annum, at the election of the Borrower pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice:
(a) during such periods as such Borrowing consists of Base Rate Loans,
the ING Alternate Base Rate (as in effect from time to time) plus 1.25%, and
----
(b) during such periods as such Borrowing consists of Eurodollar
Loans, for each Interest Period relating thereto, the Eurodollar Rate for such
Interest Period plus 3.25%.
----
SECTION 3.4.4 Continuation and Conversion Elections. By delivering a
-------------------------------------
Continuation/Conversion Notice to the Agent on or before 11:00 a.m., New York
City time, on a Business Day, the Borrower may from time to time irrevocably
elect, on not less than three (3) nor more than five (5) Business Days' notice,
that all or any portion in an aggregate minimum amount of $500,000 and an
integral multiple of $100,000 of Revolving Loans or the Term Loan be, in the
case of Base Rate Loans, converted to Eurodollar Loans or, in the case of
Eurodollar Loans, continued as Eurodollar Loans; provided, however, that:
-------- -------
(a) each such continuation or conversion shall be pro rata among the
--- ----
applicable outstanding Term Percentages of the Term Loan or Revolving
Percentages of Revolving Loans, as the case may be, of all Lenders; and
(b) no portion of the outstanding principal amount of any Loan may be
continued as, or converted into, a Eurodollar Loan when any Default has occurred
and is continuing.
37
<PAGE>
The Agent shall give prompt telephonic notice to each Lender of the interest
rate determined pursuant to this Section 3.4.4 with respect to such Loans.
-------------
Absent delivery of a Continuation/Conversion Notice with respect to any
Eurodollar Loan at least three (3) Business Days before the last day of the then
current Interest Period with respect thereto, such Eurodollar Loan shall, on
such last day, automatically convert to a Base Rate Loan.
SECTION 3.4.5 Post-Default Rates. From and after the occurrence of
------------------
an Event of Default and during the continuance thereof, the Borrower shall pay
interest (after as well as before judgment) on the outstanding principal amount
of all Loans and other Obligations at a rate per annum equal to the Post-Default
Rate applicable to such Loans and Obligations.
SECTION 3.4.6 Payment Dates. Accrued interest on any Loans shall be
-------------
payable, without duplication:
(a) on the Stated Maturity Date applicable to such Loans;
(b) with respect to any portion of any Loan prepaid or repaid pursuant
to Section 3.3.1, on the date such prepayment or repayment is due as provided in
-------------
Section 3.3.1 and, in the case of a voluntary prepayment, on the date set forth
- -------------
in any notice required for such prepayment;
(c) with respect to Base Rate Loans, on each Monthly Payment Date,
commencing with the first such day following the Closing Date;
(d) with respect to Eurodollar Loans, on the last day of each
applicable Interest Period (and if such Interest Period shall exceed three
months, also on the numerically corresponding day of the third calendar month
after the commencement of such Interest Period);
(e) with respect to any Base Rate Loans converted into Eurodollar
Loans on a day which is not a Monthly Payment Date, on the date of such
conversion; and
(f) on the date of acceleration of such Loans pursuant to Section 7.2
-----------
or Section 7.3.
-----------
Interest accruing at the Post-Default Rate and, to the extent permitted by
applicable law, interest on overdue amounts (including overdue interest), shall
be payable upon demand. The Borrower hereby irrevocably authorizes and directs
the Agent to withdraw from the Cash Reserve Account on each day that accrued
interest on the Bridge Loan shall be due and payable in accordance with this
Section 3.4.6, an amount equal to the amount of accrued interest so due and
- -------------
payable
38
<PAGE>
and to apply such amount withdrawn from the Cash Reserve Account to the payment
of such interest.
SECTION 3.4.7 Rate Determinations. All determinations by the Agent
-------------------
of the rate of interest applicable to any Loan shall be conclusive in the
absence of manifest error.
SECTION 3.4.8 Limitation on Types of Loans. Anything herein to the
----------------------------
contrary notwithstanding, if on or prior to the determination of any Eurodollar
Rate for any Interest Period:
(a) the Agent determines in good faith, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits referred
to in the definition of "Eurodollar Rate" are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining rates of
interest for Eurodollar Loans as provided herein; or
(b) the Required Lenders determine in good faith, which determination
shall be conclusive, and notify the Agent that the relevant rates of interest
referred to in the definition of "Eurodollar Rate" upon the basis of which the
rate of interest for Eurodollar Loans for such Interest Period is to be
determined are not likely to cover adequately the cost to such Lenders of making
or maintaining Eurodollar Loans for such Interest Period;
then the Agent shall give the Borrower and each Lender prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make additional Eurodollar Loans, to continue Eurodollar Loans or
to convert Base Rate Loans into Eurodollar Loans, and the Borrower shall, on the
last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Loans or such Loans shall be converted into
Base Rate Loans in accordance with Section 3.4.10 hereof.
--------------
SECTION 3.4.9 Illegality. Notwithstanding any other provision of
----------
this Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Loans hereunder, then such Lender shall promptly notify the Borrower thereof
(with a copy to the Agent) and such Lender's obligation to make or continue, or
to convert Base Rate Loans into, Eurodollar Loans shall be suspended until such
time as such Lender may again make and maintain Eurodollar Loans (in which case
the provisions of Section 3.4.10 hereof shall be applicable). If requested by
--------------
the Borrower, any such Lender shall use reasonable efforts to designate another
Applicable Lending Office, provided that such designation would not, in the
discretion of such Lender exercised in
39
<PAGE>
good faith, be materially disadvantageous to such Lender or in any manner
contrary to such Lender's policy.
SECTION 3.4.10 Treatment of Affected Loans. If the obligation of any
---------------------------
Lender to make Eurodollar Loans or continue, or to convert Base Rate Loans into,
Eurodollar Loans shall be suspended pursuant to Sections 3.4.8 or 3.4.9 hereof,
-------------- -----
such Lender's Eurodollar Loans shall be automatically converted into Base Rate
Loans on the last day(s) of the then current Interest Period(s) for Eurodollar
Loans (or, in the case of a conversion required by Sections 3.4.8 or 3.4.9
-------------- -----
hereof, on such earlier date as such Lender may specify to the Borrower with a
copy to the Agent) and, unless and until such Lender gives notice as provided
below that the circumstances specified in Sections 3.4.8 or 3.4.9 hereof which
-------------- -----
gave rise to such conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
converted, all payments and prepayments of principal which would otherwise be
applied to such Lender's Eurodollar Loans shall be applied instead to its Base
Rate Loans; and
(b) all Loans which would otherwise be made or continued by such
Lender as Eurodollar Loans shall be made or continued instead as Base Rate Loans
and all Base Rate Loans of such Lender which would otherwise be converted into
Eurodollar Loans shall remain as Base Rate Loans.
Promptly after the circumstances specified in Sections 3.4.8 or 3.4.9 which gave
-------------- -----
rise to the conversion of such Lender's Eurodollar Loans pursuant to this
Section 3.4.10 no longer exist, such Lender shall give the Agent and the
- --------------
Borrower notice thereof, and the Borrower may thereafter request conversion of
such Loans to Eurodollar Loans, subject to the subsequent application of Section
-------
3.4.8 or 3.4.9.
- ----- -----
SECTION 3.4.11 Compensation. The Borrower shall pay to the Agent for
------------
the account of each Lender, upon the request of such Lender through the Agent,
such amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost or expense which such Lender
determines is attributable to:
(a) any payment, prepayment or conversion of a Eurodollar Loan made by
such Lender for any reason (including, without limitation, the acceleration of
the Loans pursuant to Article 7 hereof) on a date other than the last day of the
---------
Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any of the conditions precedent specified in Article
-------
4 hereof to be satisfied) to
- -
40
<PAGE>
borrow a Eurodollar Loan from such Lender on the date for such borrowing
specified in the Borrowing Request given pursuant to Section 3.1 hereof.
-----------
SECTION 3.5 Taxes. (a) Any and all payments by the Borrower
-----
hereunder or under the Notes or any other Loan Document shall be made, in
accordance with this Section 3.5, free and clear of and without deduction for
-----------
any and all present or future Taxes. If the Borrower shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender or the Agent, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.5), such Lender or
-----------
the Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law;
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or intangibles taxes or any other excise or property
taxes, transfer taxes, charges or similar levies which arise from any payment
made hereunder or under the Notes or from the execution, delivery or
registration of, or otherwise with respect to this Agreement, the Notes, or any
other Loan Document;
(c) The Borrower will indemnify each Lender and the Agent for the full
amount of the taxes, charges and levies described in clauses (a) and (b) of this
Section 3.5 (including, without limitation, any such taxes, charges and levies
- -----------
imposed by any jurisdiction on amounts payable under this Section 3.5) paid by
-----------
such Lender or the Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such taxes, charges and levies were correctly or legally
asserted. Payment under this clause (c) shall be made within 30 days from the
date such Lender or the Agent (as the case may be) makes written demand
therefor;
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Agent, at its address referred to in Section 9.2,
-----------
the original or a certified copy of any receipt received by the Borrower
evidencing payment thereof;
(e) On or prior to the Closing Date and on or prior to the first
Business Day of each calendar year thereafter, each Foreign Lender shall provide
the Agent and the Borrower with two properly executed original Forms 4224 and
1001 (or any successor form) prescribed by the Internal Revenue Service or other
documents satisfactory to the Borrower and the Agent, and properly executed
Internal Revenue Service Forms W-8 or W-9, as the case may be,
41
<PAGE>
certifying (i) as to such Foreign Lenders's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to such Foreign Lender hereunder and under the Notes or (ii) that all
payments to be made to such Foreign Lender hereunder and under the Notes are
subject to such taxes at a rate reduced to zero by an applicable tax treaty.
Each Foreign Lender agrees to provide the Agent and the Borrower with new forms
prescribed by the Internal Revenue Service upon the expiration or obsolescence
of any previously delivered form, or after the occurrence of any event requiring
a change in the most recent forms delivered by it to the Agent and the Borrower;
(f) In the event that the Agent or any Lender receives a refund or
credit that, in the good faith determination of the Agent or such Lender, is
attributable to any taxes paid on its behalf by the Borrower in accordance with
this Section 3.5, the Agent or such Lenders, as the case may be, shall pay an
-----------
amount equal to such refund or credit to the Borrower; and
(g) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 3.5 shall
-----------
survive the payment in full of principal and interest hereunder and under the
Notes.
SECTION 3.6 Payments, Interest Rate Computations, Other
-------------------------------------------
Computations, etc. All payments by the Borrower pursuant to this Agreement, the
- -----------------
Notes or any other Loan Document, (a) in respect of principal or interest on the
Bridge Notes, shall be made by the Borrower to the Agent for the account of the
Lenders, pro rata according to their respective unpaid principal amounts of the
--------
Bridge Notes, (b) in respect of principal or interest on the Term Notes, shall
be made by the Borrower to the Agent for the account of the Lenders, pro rata
--------
according to their respective unpaid principal amounts of the Term Notes and,
(c) in respect of principal or interest on the Revolving Notes, shall be made by
the Borrower to the Agent for the account of the Lenders, pro rata according to
--- ----
their respective unpaid principal amounts of the Revolving Notes. The payment
of the commitment fee referred to in Section 2.4 shall be made by the Borrower
-----------
to the Agent for the account of the Lenders entitled thereto pro rata according
--------
to their respective Revolving Percentages. All other amounts payable to the
Agent or any Lender under this Agreement or any other Loan Document (except
under the Facility Fee Letter) shall be paid to the Agent for the account of the
Person entitled thereto. All such payments required to be made to the Agent
shall be made, without setoff, deduction or counterclaim, not later than 2:00
p.m., New York City time, on the date due, in immediately available funds, to
such account as the Agent shall specify from time to time by notice to the
Borrower. Funds received after that time shall be deemed to have been received
by the Agent on the next following Business Day. The Agent shall promptly remit
in the type of funds received to each Lender notified to the Agent its share, if
any, of such payments received by the Agent for the account of such Lender or
holder. All interest and fees shall be computed on the
42
<PAGE>
basis of the actual number of days (including the first day but excluding the
last day) occurring during the period for which such interest or fee is payable
over a year comprised of 360 days (365 days in the case of interest computed on
the basis of the ING Alternate Base Rate). Whenever any payment to be made
shall otherwise be due on a day which is not a Business Day, such payment shall
be made on the immediately preceding Business Day.
SECTION 3.7 Proration of Payments. If any Lender shall obtain any
---------------------
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of principal of or interest on any Loan or other
Obligations in excess of such Lender's or holder's pro rata share of payments
--------
then or therewith obtained thereon by all Lenders, such Lender which has
received in excess of its pro rata share shall purchase from the other Lenders
--- ----
such participations in such Notes or other Obligations held by them as shall be
necessary to cause such purchaser to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any portion of the
-------- -------
excess payment or other recovery is thereafter recovered from such purchasing
holder, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest. The Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section 3.7 may, to the fullest extent permitted by law, exercise all its rights
- -----------
of payment (including pursuant to Section 3.8) with respect to such
-----------
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section 3.7 applies, such Lender shall, to the
-----------
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders under this Section 3.7 to share
-----------
in the benefits of any recovery on such secured claim.
SECTION 3.8 Setoff. In addition to and not in limitation of any
------
rights of any Lender under applicable law, each Lender shall, upon the
occurrence and during the continuance of any Event of Default, have the right to
appropriate and apply to the payment of the Obligations owing to it (whether or
not then due), and (as security for such Obligations) the Borrower hereby grants
to each Lender, a continuing security interest in, any and all balances,
credits, deposits, accounts or moneys of the Borrower then or thereafter
maintained with such Lender; provided, however, that any such appropriation and
-------- -------
application shall be subject to the provisions of Section 3.7.
-----------
SECTION 3.9 Use of Proceeds.
---------------
(a) The Borrower shall use the proceeds of the Bridge Loan on the
Closing Date (i) to pay a portion of the Purchase Price, and (ii) to pay costs
and expenses arising in connection with the transactions contemplated hereby
which are set forth in Item 1 (Transaction
------
43
<PAGE>
Costs) of the Disclosure Schedule, all as more specifically described in Item 2
------
(Sources and Uses) of the Disclosure Schedule.
(b) By conversion of $10,000,000 of the outstanding principal balance
of the Bridge Loan into the Term Loan, the Term Loan shall constitute an
extension and renewal of such portion of the Bridge Loan, and the Term Loan
shall not constitute or otherwise be deemed a repayment, refinancing or novation
of any portion of the Bridge Loan.
(c) The Borrower shall use the proceeds of (i) the Revolving Loans
made on the Merger Consummation Date to refinance the remaining principal
balance of the Bridge Loan after conversion of $10,000,000 thereof into the Term
Loan, and to refinance in full the outstanding Indebtedness of STI described in
Item 3 (Indebtedness of STI to be Refinanced) of the Disclosure Schedule and
- ------
(ii) the Revolving Loans made after the Merger Consummation Date for the on-
going working capital needs of the Borrower.
(d) No part of the proceeds of any Loans shall be used for any purpose
which violates Regulations G, T, U or X of the F.R.S. Board.
SECTION 3.10. Replacement of Lender Under Certain Circumstances. If
-------------------------------------------------
(x) the obligation of any Lender to make Eurodollar Loans or to continue, or to
convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant to
Sections 3.4.8 or 3.4.9 or (y) the Borrower shall be required by law to deduct
- -------------- -----
any Taxes from or in respect of any sum payable hereunder or under any Note to
any Lender in respect of which the Borrower is required to increase amounts
payable to such Lender under subsection (a) of Section 3.5, in either such case
-----------
the Borrower may obtain a replacement bank, financial institution or other
lender to acquire and assume all or part of such affected Lender's Loans and
Revolving Loan Commitment and such affected Lender shall transfer all or such
part of its Loans and Revolving Loan Commitment upon receipt of the purchase
price therefor (which shall equal the outstanding principal amount of its Loans
plus all accrued and unpaid interest and fees to the date of purchase, plus all
other amounts owing by the Borrower to such affected Lender under this
Agreement. Any such replacement bank, financial institution or other lender
shall be subject to the prior written consent of the Agent, which consent shall
not be unreasonably withheld.
44
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ARTICLE 4
CONDITIONS TO LOANS
SECTION 4.1 Bridge Loan. The obligations of the Lenders to fund the
-----------
Bridge Loan on the Closing Date shall be subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in this Section 4.1.
-----------
SECTION 4.1.1 Resolutions, etc. The Agent shall have received:
----------------
(a) a certificate, dated the Closing Date, of the Secretary of each
Loan Party as of the Closing Date as to:
(i) resolutions of its Board of Directors, then in full force and
effect authorizing the execution, delivery and performance of the Loan
Documents to which such Loan Party is a party and the related transactions
contemplated thereby, and
(ii) the incumbency and signatures of those of its officers authorized
to act with respect to the Loan Documents to which it is party, upon which
certificate each Lender may conclusively rely until it shall have received
further certificates of the Secretary of such Loan Party canceling or
amending such prior certificates;
(b) copies of the Organic Documents of each Loan Party as of the
Closing Date certified by, in the case of the charters, the appropriate
Governmental Authority of the State of such Loan Party's incorporation and, in
the case of its other Organic Documents, such Loan Party's Secretary, which
documents shall be satisfactory to the Agent;
(c) a so-called "good standing" certificate with respect to each Loan
Party as of the Closing Date from the appropriate Governmental Authority of the
State of its incorporation;
(d) evidence of qualification of each Loan Party as of the Closing
Date to do business in each other jurisdiction in which the failure to so
qualify could result in a Material Adverse Change; and
(e) such other documents (certified if requested) as the Agent or the
Required Lenders may reasonably request, with respect to this Agreement, the
Notes, any other Loan Document, the transactions contemplated hereby and
thereby, or any Organic Document, Contractual Obligation or Regulatory Approval.
45
<PAGE>
SECTION 4.1.2 Bridge Notes. The Agent shall have received for the
------------
account of each Lender, such Lender's Bridge Note, in each case duly executed
and delivered pursuant to clause (a) of Section 3.2.
-----------
SECTION 4.1.3 Subsidiary Guaranty. The Agent shall have received for
-------------------
the account of each Lender the Brunswick Subsidiary Guaranty, duly executed and
delivered by each Subsidiary of Brunswick located in the United States, other
than STI and its Subsidiaries and other than the Inactive Subsidiaries.
SECTION 4.1.4 No Contest, etc. No litigation, arbitration,
----------------
governmental investigation, injunction, proceeding or inquiry shall be pending
or, to the knowledge of Brunswick, threatened which:
(a) seeks to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief from Brunswick, Technology or, to the
knowledge of Brunswick, the Estate, as a result of, the transactions
contemplated by or in connection with the Acquisition Agreement, this Agreement
or any Loan Document; or
(b) would, in the opinion of the Agent, be materially adverse to any
of the parties hereto with respect to the transactions contemplated hereby;
No litigation set forth in Item 4 (Litigation) of the Disclosure Schedule, in
------
the reasonable opinion of the Agent, could result in a Material Adverse Change
or give rise to any liability on the part of the Agent or any Lender in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby.
SECTION 4.1.5 Certificate as to Completed Conditions, Warranties, No
------------------------------------------------------
Default, etc. The Agent shall have received a certificate, dated the Closing
- -------------
Date, of the chief executive officer of Brunswick, to the effect that:
(a) all conditions precedent set forth in this Section 4.1 and in
-----------
Section 4.3 have been satisfied;
- -----------
(b) all representations and warranties set forth in Article 5 are true
---------
and correct in all material respects;
(c) all representations and warranties set forth in the Loan Documents
are true and correct in all material respects; and
46
<PAGE>
(d) no Default has occurred and is continuing.
SECTION 4.1.6 Opinion of Counsel. The Agent shall have received
------------------
opinion letters, dated the Closing Date and addressed to the Agent and all
Lenders, from Palmer & Dodge, counsel to Brunswick and its Subsidiaries, in form
and substance satisfactory to the Agent, and covering such matters as the Agent
may request, including the Acquisition.
SECTION 4.1.7 Closing Fees, Expenses, etc. The Agent shall have
----------------------------
received the facility fee, which was due and payable pursuant to the terms of
the Facility Fee Letter, and all costs and expenses which have been invoiced and
are payable upon the initial Borrowing pursuant to Section 9.3.
-----------
SECTION 4.1.8 Security Documents and Perfection. The Agent shall
---------------------------------
have received:
(a) The Brunswick Security Agreement, duly executed by an Authorized
Officer of Brunswick and each Subsidiary of Brunswick located in the United
States, other than STI and its Subsidiaries and other than the Inactive
Subsidiaries;
(b) The Brunswick Patent Assignment and the Brunswick Trademark
Assignment duly executed by an Authorized Officer of Brunswick, and the
Technology Patent Assignment and Technology Trademark Assignment duly executed
by an Authorized Officer of Technology;
(c) Evidence of all filings of the Financing Statements with respect
to the Brunswick Security Agreement and other Security Documents executed on the
Closing Date; searches or other evidence as to the absence of any perfected
security interests or Liens (except those previously disclosed to and consented
to by the Lenders); and evidence that all other actions (including all actions
necessary such that the Brunswick Patent Assignment, the Brunswick Trademark
Assignment, the Technology Patent Assignment and the Technology Trademark
Assignment are acceptable for filing in the United States Patent and Trademark
Office and the payment of all documentary, intangibles, filing and recording
taxes and fees) with respect to the Liens created by the Security Documents
executed on the Closing Date have been taken as are necessary or appropriate to
perfect such Liens;
(d) The Brunswick Pledge Agreement, duly executed by an Authorized
Officer of Brunswick;
47
<PAGE>
(e) All (i) stock certificates and undated stock powers duly executed
in blank relating thereto with respect to the pledged securities under the
Brunswick Pledge Agreement, which pledged securities shall consist of the STI
Shares and all outstanding Stock held by Brunswick in its other Subsidiaries
located in the United States (other than the Inactive Subsidiaries) and (ii) all
promissory notes and other instruments owned by Borrower duly endorsed in blank
pledged under the Brunswick Pledge Agreement;
(f) A collateral assignment to the Agent, for its benefit and the
ratable benefit of the Lenders, of Brunswick's rights under the Acquisition
Agreement and all other documents executed or delivered by the Estate pursuant
to the Acquisition Agreement, duly consented to by the Estate, which assignment
shall be in form and substance satisfactory to the Agent;
(g) A collateral assignment to the Agent, for its benefit and the
ratable benefit of the Lenders, of Brunswick's rights under the Estate
Registration Rights Agreement, which assignment and registration rights shall be
in form and substance satisfactory to the Agent;
(h) The Cash Reserve Account Agreement, duly executed by Brunswick,
the Agent and SunTrust Bank, Atlanta.
SECTION 4.1.9 Employment Agreements; Compensation. The Agent shall
-----------------------------------
have received copies of all employment agreements to which Brunswick or any of
its Subsidiaries is a party (including STI or any of its Subsidiaries), and the
Agent shall be satisfied in all respects with the levels of compensation
(including, without limitation, fees, wages, salaries, deferred payment
arrangements, stock options, incentive plans and pension or employee benefit
contributions) paid to key members of management.
SECTION 4.1.10 Pension and Welfare Liabilities. The Agent shall have
-------------------------------
received (i) the most recent actuarial valuation report for each Single Employer
Plan, if any, and a copy of Schedule B to the Annual Report on Form 5500 of the
Internal Revenue Service for each such Single Employer Plan most recently filed
with the Internal Revenue Service, and (ii) a report prepared by Brunswick in
form and substance satisfactory to the Agent detailing any liabilities of
Brunswick and each of its Subsidiaries and of STI and each of its Subsidiaries,
and of each Commonly Controlled Entity of Brunswick or STI for post-retirement
benefits under Plans which are welfare benefit plans.
SECTION 4.1.11 Insurance. The Agent shall have received evidence
---------
satisfactory to it that the insurance maintained by Brunswick, STI and their
respective Subsidiaries is issued by an insurance company with a Best's rating
of "A" or better and a financial size category of not less than XII, is in
amounts satisfactory to the Agent and, in the
48
<PAGE>
case of insurance maintained by Brunswick and its Subsidiaries (other than STI
and its Subsidiaries), under policies naming the Agent as loss payee (in the
case of casualty insurance policies) and as additional insured (in the case of
liability policies), and otherwise complying with the requirements of this
Agreement and the Security Documents.
SECTION 4.1.12 Key Man Insurance. Brunswick shall have purchased
-----------------
"key-man" life insurance policies in the total amount of $500,000 on the life of
James H. Miller.
SECTION 4.1.13 Financial Information, etc. The Agent shall have
--------------------------
received the historical financial statements referred to in Section 5.4, the
-----------
Closing Date Pro Forma Balance Sheet, a Fair Saleable Value Balance Sheet for
---------
Brunswick as of the Closing Date, the Trial Merger Pro Forma Balance Sheet and
--- -----
the Projections.
SECTION 4.1.14 Solvency, etc. The Fair Saleable Value Balance Sheet
-------------
for Brunswick as of the Closing Date shall show that the assets of Brunswick are
at least $6,540,888 greater than the liabilities of Brunswick (including all
liabilities and obligations of Brunswick, fixed or contingent, direct or
indirect, disputed or undisputed, and whether or not required to be reflected on
a balance sheet prepared in accordance with GAAP, except to the extent noted
thereon); and the Agent shall have received a certificate of the chief executive
officer of Brunswick dated the Closing Date, stating that, after giving effect
to the consummation of the transactions contemplated by this Agreement to occur
on the Closing Date (including the Acquisition and the making of the Bridge
Loan), each of Brunswick and Technology is Solvent.
SECTION 4.1.15 Acquisition. The Acquisition Agreement shall remain in
-----------
full force and effect and shall not have been amended, modified or supplemented
without the Agent's approval, all conditions precedent to the consummation by
Brunswick of the transactions contemplated by the Acquisition Agreement shall
have been fully satisfied or waived with the consent of the Agent, Brunswick
shall have delivered to the Agent evidence satisfactory to the Agent that the
Acquisition shall be consummated simultaneously with the funding of the Bridge
Loan substantially in accordance with the terms of the Acquisition Agreement,
and Brunswick shall have delivered to the Agent each of the following:
(a) resolutions of the boards of directors and, to the extent
required, the stockholders of Brunswick, certified by the Secretary of
Brunswick, to be duly adopted and in full force and effect on the Closing Date,
authorizing the execution, delivery and performance of the Acquisition
Agreement;
49
<PAGE>
(b) certified copies of all documents evidencing any other necessary
corporate action, consents and Regulatory Approvals with respect to the
consummation of the transactions contemplated by the Acquisition Agreement; and
(c) a certificate from the chief executive officer of Borrower to the
effect that attached thereto are true and correct copies of the Acquisition
Agreement and each of the material documents, instruments and agreements
executed and delivered pursuant to the Acquisition Agreement and making such
statements of fact concerning the Acquisition and the other transactions
consummated pursuant to such agreements as the Agent shall reasonably request.
SECTION 4.1.16 Cash Reserve Fund. Brunswick shall have established
-----------------
the Cash Reserve Account for the benefit of the Agent and shall have irrevocably
directed the Agent to deposit from the proceeds of the Bridge Loan the sum of
$1,000,000 in the Cash Reserve Account.
SECTION 4.1.17. Capital Contributions; Junior Subordinated Note. The
-----------------------------------------------
Agent shall have received evidence that, since August 1, 1995, Brunswick has
received not less than $7,000,000 in cash proceeds from the issuance of its
Stock, and $1,000,000 in cash proceeds from the issuance of the Junior
Subordinated Note.
SECTION 4.1.18. Other Documents, Certificates, Etc. The Agent shall
-----------------------------------
have received such other documents, certificates, opinions of counsel or other
materials as it reasonably requests from any Loan Party.
SECTION 4.2 Term Loan and Revolving Loans. The obligations of the
-----------------------------
Lenders to fund the Term Loan and Revolving Loans on the Merger Consummation
Date shall be subject to the prior or concurrent satisfaction of each of the
conditions precedent set forth in this Section 4.2.
-----------
SECTION 4.2.1 Resolutions, etc. The Agent shall have received:
----------------
(a) a certificate, dated the Merger Consummation Date, of the
Secretary of STI as to:
(i) resolutions of its Board of Directors, then in full force and
effect authorizing (A) the Merger, (B) the execution, delivery and
performance of the Assumption Agreement, the Term Notes, the Revolving
Notes and all other Loan
50
<PAGE>
Documents to which such Loan Party is a party and (C) the related
transactions contemplated thereby, and
(ii) the incumbency and signatures of those of its officers authorized
to act with respect to the Assumption Agreement, the Term Notes, the
Revolving Notes and all Loan Documents to which it is party, upon which
certificate each Lender may conclusively rely until it shall have received
further certificates of the Secretary of such Loan Party canceling or
amending such prior certificates;
(b) a certificate, dated as of the Merger Consummation Date, of the
Secretary of each Subsidiary of STI executing a Loan Document as of the Merger
Consummation Date as to:
(i) resolutions of its Board of Directors, then in full force and
effect, authorizing the execution, delivery and performance of each Loan
Document to which such Subsidiary is a party and the transactions
contemplated thereby, and
(ii) the incumbency and signature of those of its officers authorized
to act with respect to all Loan Documents to which it is a party, upon
which certificate each Lender may conclusively rely until it shall have
received further certificates of the Secretary of such Subsidiary canceling
or amending such prior certificate;
(c) copies of the Organic Documents of STI and each Subsidiary of STI
executing a Loan Document as of the Merger Consummation Date certified by, in
the case of charters, the appropriate Governmental Authority of the State of
such Loan Party's incorporation and, in the case of its other Organic Documents,
such Loan Party's Secretary, which documents shall be satisfactory to the Agent;
(d) a so-called "good standing" certificate with respect to STI and
each Subsidiary of STI executing a Loan Document as of the Merger Consummation
Date from the appropriate Governmental Authority of the State of its
incorporation;
(e) evidence of qualification of STI and each Subsidiary of STI to do
business in each other jurisdiction in which the failure to so qualify could
result in a Material Adverse Change; and
(f) such other documents (certified if requested) as the Agent may
reasonably request, with respect to this Agreement, the Notes, any other Loan
Document, the transactions
51
<PAGE>
contemplated hereby and thereby, or any Organic Document, Contractual Obligation
or Regulatory Approval.
SECTION 4.2.2 Term Notes and Revolving Notes. The Agent shall have
------------------------------
received for the account of each Lender, such Lender's Term Note and Revolving
Note, in each case, duly executed and delivered by STI pursuant to clauses (b)
and (c) of Section 3.2.
-----------
SECTION 4.2.3 STI Subsidiary Guaranty. The Agent shall have received
-----------------------
for the account of each Lender the STI Subsidiary Guaranty, duly executed and
delivered by each Subsidiary of STI located in the United States, other than the
Inactive Subsidiaries.
SECTION 4.2.4 Release of Liens on Assets. All Indebtedness of STI
--------------------------
and its Subsidiaries described in Item 3 (Indebtedness of STI to be Refinanced)
------
of the Disclosure Schedule shall have been repaid in full and all holders of
such Indebtedness shall have acknowledged such repayment, released STI and its
Subsidiaries from any liability in respect of such Indebtedness, and released
all Liens on the assets securing such Indebtedness pursuant to UCC-3 Termination
Statements and other Instruments as shall be suitable or appropriate in
connection therewith.
SECTION 4.2.5 No Contest, etc. No litigation, arbitration,
----------------
governmental investigation, injunction, proceeding or inquiry shall be pending
or, to the knowledge of Brunswick or STI, threatened which:
(a) seeks to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the Merger or the
transactions contemplated by or in connection with this Agreement, the
Assumption Agreement or any other Loan Document; or
(b) would, in the reasonable opinion of the Agent be materially
adverse to any of the parties hereto with respect to the transactions
contemplated hereby;
No litigation set forth in Item 4 (Litigation) of the Disclosure Schedule, in
------
the reasonable opinion of the Agent, could result in a Material Adverse Change
or give rise to any liability on the part of the Agent or any Lender in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby.
SECTION 4.2.6 Certificate as to Completed Conditions, Warranties, No
------------------------------------------------------
Default, etc. The Agent shall have received a certificate, dated the Merger
- -------------
Consummation Date, of the chief executive officer of STI to the effect that;
52
<PAGE>
(a) all conditions precedent set forth in this Section 4.2 and in
-----------
Section 4.3 have been satisfied;
- -----------
(b) all representations and warranties set forth in Article 5 are true
---------
and correct in all material respects;
(c) all representations and warranties set forth in the Loan Documents
are true and correct in all material respects; and
(d) no Default has occurred and is continuing.
SECTION 4.2.7 Opinions of Counsel. The Agent shall have received
-------------------
opinion letters, dated the Merger Consummation Date and addressed to the Agent
and all Lenders, from
(a) counsel to STI and its Subsidiaries, substantially in the form of
Exhibit H;
- ---------
(b) counsel to STI in the States of Maryland and Missouri, in form and
substance reasonably satisfactory to the Agent and covering such matters as the
Agent may request;
(c) counsel to STI and STI International, Limited in England, in form
and substance reasonably satisfactory to the Agent and covering such matters
relating to the Share Charge and STI International, Limited, as the Agent may
request; and
(d) if required by the Agent, counsel to STI and Brunswick Biomedical
Limited in Ireland, in form and substance reasonably satisfactory to the Agent
and covering such matters related to Brunswick Biomedical Limited and a share
charge over Stock of Brunswick Biomedical Limited owned by STI or any of its
Subsidiaries as the Agent may request.
SECTION 4.2.8 Assumption Agreement. The Agent shall have received
--------------------
the Assumption Agreement duly executed by an Authorized Officer of STI.
SECTION 4.2.9 Security Documents and Perfection. The Agent shall
---------------------------------
have received:
(a) The STI Security Agreement, duly executed by an Authorized Officer
of STI and each Subsidiary of STI located in the United States, other than the
Inactive Subsidiaries;
53
<PAGE>
(b) The STI Patent Assignment and the STI Trademark Assignment duly
executed by an Authorized Officer of STI and each Subsidiary of STI located in
the United States, other than the Inactive Subsidiaries;
(c) Evidence of all filings of the Financing Statements with respect
to the STI Security Agreement and the other Security Documents executed and
delivered by STI and its Subsidiaries on the Merger Consummation Date; evidence
that all other actions (including all actions necessary such that the STI Patent
Assignment and the STI Trademark Assignment are acceptable for filing in the
United States Patent and Trademark Office and the payment of all documentary,
intangibles, filing and recording taxes and fees) with respect to the Liens
created by the Security Documents executed by STI and its Subsidiaries on the
Merger Consummation Date have been taken as are necessary or appropriate to
effect such Liens;
(d) UCC amendments to all Financing Statements naming Brunswick as
debtor and filed pursuant to clause (c) of Section 4.1.8, amending such
-------------
Financing Statements to reflect that the debtor with respect to such Financing
Statements is STI as successor by merger to Brunswick, in each case duly
executed by the Borrower;
(e) searches or other evidence as to the absence of any perfected
security interests or Liens (except those permitted under Section 6.2.3 and
-------------
those to be released pursuant to Section 4.2.4.) against STI or any of its
-------------
property; and evidence that all other actions with respect to the Liens created
by the Security Documents have been taken as are necessary or appropriate to
continue the perfection of Liens granted thereunder; and
(f) The STI Pledge Agreement and the Share Charge, duly executed by an
Authorized Officer of STI, and if requested by the Agent prior to the Merger
Consummation Date, a share charge (or the equivalent thereof) pursuant to which
sixty-six and two-thirds (66 2/3%) of the outstanding Stock of Brunswick
Biomedical Limited shall be pledged to the Agent, duly executed by an Authorized
Officer of STI and any Subsidiary of STI that owns such Stock;
(g) all (i) stock certificates and undated stock powers duly executed
in blank relating thereto with respect to the pledged securities under the STI
Pledge Agreement, which pledged securities shall constitute (after giving effect
to the Merger) all outstanding stock of all Subsidiaries of STI located in the
United States (other than the Inactive Subsidiaries) and sixty-six and two-
thirds percent (66-2/3%) of the outstanding stock of all Subsidiaries of STI
located outside the United States; provided, however, STI and its Subsidiaries
-------- -------
shall not have to pledge any shares of outstanding Stock of Brunswick Biomedical
Limited unless requested by the Agent prior to the Merger Consummation Date; and
(ii) all promissory notes and other instruments owned by STI duly endorsed in
blank pledged under the STI Pledge Agreement.
54
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(h) Mortgages covering the real property owned and leased by STI which
is identified on Item 5 (Mortgaged Property) of the Disclosure Schedule,
------
together with such title insurance policies, title searches, abstracts of title
or other title work as may be required by the Agent with regard to such real
property, insuring the security title of the Agent in such real property and
including such endorsements as the Agent shall require, as well as surveys,
valuations of properties and assets, certificates of occupancy, deeds, leases,
tenant subordination agreements, leasehold assignments and related consents of
landlords, and such environmental reports, assessments and diligence as the
Agent shall require; and
(i) An assignment to the Agent, for its benefit and the ratable
benefit of the Lenders, of the insurance policies described in Section 4.1.12
--------------
(with respect to which the insurer shall have executed and delivered to the
Agent a written consent), which assignment shall be in form and substance
satisfactory to the Agent.
SECTION 4.2.10 Financial Information, etc. The Agent shall have
---------------------------
received unaudited consolidated balance sheets of STI as of the last day of each
Fiscal Quarter subsequent to the Fiscal Quarter ending January 31, 1996 and
ending prior to the Merger Consummation Date and the related consolidated
statements of income for each of such Fiscal Quarters, and, if available, the
consolidated audited balance sheets of STI as of July 31, 1996, as well as the
Merger Pro Forma Balance Sheet, a Fair Saleable Value Balance Sheet for STI as
--- -----
of the Merger Consummation Date, and, to the extent required to reflect
historical experience, revisions to the Projections delivered as of the Closing
Date.
SECTION 4.2.11 Solvency, etc. The Fair Saleable Value Balance Sheet
-------------
for STI as of the Merger Consummation Date shall show that the assets of STI
(after giving effect to the Merger) are at least $6,540,888 greater than the
liabilities of STI (after giving effect to the Merger) (including all
liabilities and obligations of STI, fixed or contingent, direct or indirect,
disputed or undisputed, and whether or not required to be reflected on a balance
sheet prepared in accordance with GAAP, except to the extent noted thereon); and
the Agent shall have received a certificate of the chief executive officer of
STI dated the Merger Consummation Date, stating that after giving effect to the
consummation of the transactions contemplated by this Agreement to occur on the
Merger Consummation Date (including the Merger, the making of the Revolving
Loans to be made on the Merger Consummation Date and the conversion of
$10,000,000 of the Bridge Loan into the Term Loan), STI and each of its
Subsidiaries (other than the Inactive Subsidiaries) is Solvent.
55
<PAGE>
SECTION 4.2.12 Merger of Brunswick into STI. The Agent shall have
----------------------------
received:
(a) evidence that all filings and registrations required to be made
with the Securities and Exchange Commission in connection with the consummation
of the Merger shall have been submitted and, to the extent applicable, approved,
and shall be effective;
(b) copies of all agreements, instruments, and documents executed,
delivered or furnished in connection with the Merger (the "Merger Documents"),
----------------
and evidence that the Merger Documents remain in full force and effect and have
not have been amended, modified or supplemented and that all conditions
precedent to the consummation of the Merger have been fully satisfied or waived;
(c) each of the following, in form and substance satisfactory to the
Agent:
(i) resolutions of the boards of directors and, to the extent
required, the stockholders of Brunswick and STI, certified by the Secretary
of Brunswick and STI, respectively, to be duly adopted and in full force
and effect on the Merger Consummation Date, authorizing and approving the
Merger and the execution, delivery and performance of the Merger Documents;
(ii) certified copies of all documents evidencing any other necessary
corporate action, consents and Regulatory Approvals with respect to the
consummation of the Merger;
(iii) a certificate from the chief executive officer of Borrower (A)
to the effect that attached thereto are true and correct copies of the
Merger Documents and each of the material documents, instruments and
agreements executed and delivered pursuant thereto, that the Merger has
been consummated in accordance with all applicable law, rules and
regulations, including all securities and antitrust laws and regulations,
and that all Regulatory Approvals required in connection with the Merger
have been obtained, and (B) making such other statements of fact concerning
the Merger as the Agent shall reasonably request;
(d) a certificate from the chief executive officer of Borrower
certifying that no shareholder of STI has exercised or that no shareholder of
STI is entitled to exercise any appraisal rights they may have in connection
with the Merger, whether such rights arise as a matter of law or otherwise; and
56
<PAGE>
(e) a certificate from the chief executive officer of Borrower
certifying that shareholders of Brunswick holding no more than three percent
(3%) of the outstanding capital stock of Brunswick have exercised any appraisal
rights they may have in connection with the Merger, whether such rights arise as
a matter of law or otherwise.
SECTION 4.2.13 Maturity of Bridge Loan. The date of the conversion of
-----------------------
$10,000,000 of the outstanding principal balance of the Bridge Loan and the
funding of the Revolving Loans to be funded on the Merger Consummation Date
shall be on or prior to the Stated Maturity Date of the Bridge Loan.
SECTION 4.2.14 Reaffirmation of Representations and Warranties. The
-----------------------------------------------
Borrower shall have reaffirmed as of the Merger Consummation Date, in form and
substance satisfactory to the Agent, each of the representations and warranties
made in Article 5 of this Agreement, except for any such representation or
---------
warranty expressly made as of a particular date, which STI shall have reaffirmed
as of such date. In addition, STI shall have represented and warranted to the
Agent and the Lenders the following (which shall be deemed to supplement the
representations and warranties in Article 5): (i) the Merger Pro Forma Balance
--- -----
Sheet has been prepared in accordance with GAAP consistently applied (except to
the extent based upon estimates) throughout the periods involved and presents
fairly in all material respects the matters reflected therein, (ii) as of the
Merger Consummation Date, neither STI nor its Subsidiaries has material
contingent liabilities or material liabilities for taxes, long-term leases or
unusual forward or long-term commitments which are not reflected in such Merger
Pro Forma Balance Sheet, (iii) as of the Merger Consummation Date, after giving
- --- -----
effect to the consummation of the transactions contemplated by this Agreement
and the other Loan Documents to occur on the Merger Consummation Date (including
the Merger, the conversion of $10,000,000 of the outstanding principal balance
of the Bridge Loan into the Term Loan and the making of the Revolving Loans
contemplated to be made on the Merger Consummation Date), STI is solvent, and
(iv) each of the Security Documents executed on the Merger Consummation Date
creates a fully perfected first lien on, and security interest in, all right,
title and interest of the Loan Parties executing such Security Documents in all
of the Collateral described therein, other than Liens permitted under Section
-------
6.2.3.
- -----
SECTION 4.2.15 No Dividends; etc. Since the Closing Date, STI shall
------------------
not have declared or paid any dividends or other distributions on its Stock, and
no material increase shall have occurred in the liabilities, liquidated or
contingent, of STI and its Subsidiaries and no material decrease shall have
occurred in the assets of STI and its Subsidiaries.
SECTION 4.3 All Loans. Without duplication of any conditions
---------
precedent required to be satisfied pursuant to Section 4.1 or Section 4.2, the
----------- -----------
obligations of the Lenders to
57
<PAGE>
make any Loan, shall be subject to the satisfaction of each of the additional
conditions precedent set forth in this Section 4.3.
-----------
SECTION 4.3.1 Compliance with Warranties, No Default, etc. The
--------------------------------------------
representations and warranties set forth in Article 5 (including from and after
---------
the Merger Consummation Date, those representations and warranties set forth in
Section 4.2.14) shall have been true and correct in all material respects as of
- --------------
the date initially made. In addition, both before and after giving effect to
the making of any such Loan and the application of the proceeds thereof,
(a) such representations and warranties shall be true and correct in
all material respects with the same effect as if then made (except to the
extent expressly made as of a specified date, in which case such
representations and warranties shall be true as of such specified date);
(b) all representations and warranties set forth in the Security
Documents shall be true and correct in all material respects with the same
effect as if then made (except to the extent expressly made as of a
specified date, in which case such representations and warranties shall be
true as of such specified date);
(c) no material adverse development shall have occurred in any
litigation, arbitration or governmental investigation, proceeding or
inquiry disclosed pursuant to Section 5.7 which renders such litigation,
-----------
arbitration or governmental investigation or inquiry or proceeding, in the
reasonable opinion of the Required Lenders, likely to be adversely
determined and, if adversely determined, could result in a Material Adverse
Change; and
(d) no Default shall have occurred and be continuing.
SECTION 4.3.2 Borrowing Request, etc. The Agent shall have received
-----------------------
a duly completed Borrowing Request. The delivery of any such Borrowing Request,
and the acceptance by the Borrower of the proceeds of any such Loan, shall
constitute a representation and warranty by the Borrower that on the date of
such request for a Loan, and before and after giving effect to the making of
such Loan and the application of any proceeds of such Loan, all statements set
forth in Section 4.3.1 are true and correct. In the event that, in connection
-------------
with the delivery of any such Borrowing Request the Borrower is required to
amend any Item of the Disclosure Schedule in order that the statement set forth
in clause (a) or (b) of Section 4.3.1 shall be true and correct, the Borrower
-------------
shall deliver to the Agent at least three (3) Business Days prior to the date of
the Borrowing requested or to be requested, a request that such Item of the
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Disclosure Schedule be amended, and the Agent shall promptly forward such
request to the Lenders. To the extent that the Required Lenders agree to such
requested amendment or otherwise make any Loans after receipt of such request,
the representations and warranties proposed to be amended by such amendment to
the Disclosure Schedule will be deemed amended for purposes of this Agreement.
SECTION 4.3.3 Satisfactory Legal Form. All documents executed or
-----------------------
submitted by or on behalf of the Borrower or any Subsidiary shall be reasonably
satisfactory in form and substance to the Agent and its counsel, the Agent and
its counsel shall have received all information, and such counterpart originals
or such certified or other copies of such Instruments, as the Agent or its
counsel may request. All legal matters incident to the transactions
contemplated by this Agreement shall be satisfactory to counsel to the Agent.
SECTION 4.3.4 Margin Regulations. The making of such Loan and the
------------------
use of the proceeds thereof shall not violate Regulations G, T, U and X of the
F.R.S. Board.
SECTION 4.3.5 Adverse Change. In the reasonable judgment of the
--------------
Required Lenders, no Material Adverse Change shall have occurred since the
Closing Date.
SECTION 4.3.6 Change in Law. On the date of such Loan, no change
-------------
shall have occurred in applicable law, or in applicable regulations thereunder
or in interpretations thereof by any court or Governmental Authority which, in
the opinion of any Lender, would make it illegal for such Lender to make the
Loan required to be made on such date.
ARTICLE 5
WARRANTIES, ETC.
In order to induce the Lenders and the Agent to enter into this
Agreement, to engage in the transactions contemplated herein and in the other
Loan Documents and to make the Loans, the Borrower represents and warrants to
the Agent and each Lender as set forth in this Article 5; provided, however,
--------- -------- -------
that to the extent any representation or warranty made by Brunswick prior to the
Merger Consummation Date relates to STI or any of its Subsidiaries, such
representation or warranty is made to the best knowledge of Brunswick.
SECTION 5.1 Organization, Power, Authority, etc. Each of the
------------------------------------
Borrower and its Subsidiaries (i) is a corporation validly organized and
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified to do business and is in
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good standing as a foreign corporation in each jurisdiction where the failure to
so qualify could result in a Material Adverse Change, and (iii) has full power
and authority, and, except as set forth in Item 6 (Governmental Licenses) of the
------
Disclosure Schedule, holds all governmental licenses, permits, registrations and
other Regulatory Approvals required under all Requirements of Law, to own and
hold under lease its property and to conduct its business as conducted prior to
the Closing Date and as contemplated to be conducted subsequent to the Closing
Date and the Merger Consummation Date. Each Loan Party has full power and
authority to enter into and perform its Obligations under this Agreement, the
Notes and each other Loan Document executed or to be executed by it and to incur
Indebtedness hereunder or under the Subsidiary Guaranty, as the case may be.
SECTION 5.2 Due Authorization. The execution and delivery by each
-----------------
Loan Party of each Loan Document executed or to be executed by it, and the
incurrence and performance by such Loan Party of its respective Obligations have
been duly authorized by all necessary corporate action, do not require any
Regulatory Approval (except those Regulatory Approvals already obtained), do not
and will not conflict with, result in any violation of, or constitute any
default under, any provision of any Organic Document or Contractual Obligation
of such Loan Party or any law or governmental regulation or court decree or
order, and will not result in or require the creation or imposition of any Lien
on such Loan Party's properties pursuant to the provisions of any Contractual
Obligation of such Loan Party.
SECTION 5.3 Validity, etc. Each of this Agreement, the Notes and
--------------
the other Loan Documents constitutes the legal, valid and binding obligation of
each Loan Party executing and delivering such Loan Document, enforceable in
accordance with its terms subject to the effect of any applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights generally,
and the effect of general principles of equity (regardless of whether considered
in a proceeding in equity or at law).
SECTION 5.4 Financial Information; Solvency.
-------------------------------
(a) Except as disclosed in Item 7 (Exceptions to GAAP) of the
------
Disclosure Schedule, all balance sheets, all statements of operations,
stockholders' equity and cash flows, and all other financial information of
Brunswick and STI which have been furnished by or on behalf of Brunswick or STI
to the Agent and the Lenders for the purposes of or in connection with this
Agreement or any transaction contemplated hereby, including:
(i) the consolidated audited balance sheets of Brunswick as of June
30, 1994 and June 30, 1995, and the related consolidated statements of
income and cash flows for
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each of the two (2) fiscal years of Brunswick ending June 30, 1994 and June
30, 1995, together with the opinion thereon of Arthur Andersen LLP;
(ii) the unaudited consolidated balance sheets of Brunswick as of
September 30, 1995 and December 31, 1995, and the related consolidated
statements of income for each of the fiscal quarters of Brunswick ending
September 30, 1995 and December 31, 1995;
(iii) the consolidated audited balance sheets of STI as of July 31,
1994 and July 31, 1995, and the related consolidated statements of income
and cash flows for each of the two (2) fiscal years of STI ending July 31,
1994 and July 31, 1995, each as included in its annual report on Form 10-K
filed with the Securities and Exchange Commission, together with the
opinion thereon of Price Waterhouse LLP;
(iv) the unaudited consolidated balance sheets of STI as of October
31, 1995 and January 31, 1996 and the related consolidated statements of
income for each of the fiscal quarters of STI ending October 31, 1996 and
January 31, 1996, each as included in its quarterly report on Form 10-Q
filed with the Securities and Exchange Commission;
(v) the Closing Date Pro Forma Balance Sheet;
---------
(vi) the Trial Merger Pro Forma Balance Sheet; and
--- -----
(vii) the Projections;
have been prepared in accordance with GAAP consistently applied (except to the
extent items in the Closing Date Pro Forma Balance Sheet, the Trial Merger Pro
--------- ---
Forma Balance Sheet, and the Projections are based upon estimates) throughout
- -----
the periods involved and present fairly in all material respects the matters
reflected therein subject, in the case of unaudited statements, to changes
resulting from normal year-end audit adjustments and except as to the absence of
footnotes. As of the Closing Date, neither Brunswick nor STI nor any of their
respective Subsidiaries has material contingent liabilities or material
liabilities for taxes, long-term leases or unusual forward or long-term
commitments which are not reflected in the financial statements described in
clauses (i), (ii), (iii), (iv), (v) and (vi).
(b) After giving effect to the consummation of the transactions
contemplated by this Agreement and the other Loan Documents to occur on the
Closing Date (including the Acquisition and the Bridge Loan), Brunswick is
Solvent.
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SECTION 5.5 Material Adverse Change. (a) Since June 30, 1995, there
-----------------------
has been no material adverse change in the condition (financial or otherwise),
operations, performance, business, properties or prospects of the Brunswick and
its Subsidiaries (other than STI and its Subsidiaries), taken as a whole, or in
any industry in which the Borrower or any of its Subsidiaries (other than STI
and its Subsidiaries) is engaged in any material respect.
(b) Since July 31, 1995, there has been no material adverse change in
the condition (financial or otherwise), operations, performance, business,
properties or prospects of STI and its Subsidiaries, taken as a whole, or in any
industry in which STI or any of its Subsidiaries is engaged in any material
respect.
SECTION 5.6 Absence of Default. Neither the Borrower nor any
------------------
Subsidiary is in default in the payment of (or in the performance of any
obligation applicable to) any Indebtedness, or is in material default under any
regulation of any Governmental Agency or court decree or order, or is in default
under any Requirements of Law which default could result in a Material Adverse
Change.
SECTION 5.7 Litigation, Legislation, etc. Except as disclosed in
-----------------------------
Item 4 (Litigation) of the Disclosure Schedule, there is no pending or, to the
- ------
knowledge of the Borrower, threatened litigation, arbitration or governmental
investigation, proceeding or inquiry which, if adversely determined, could
result in a Material Adverse Change; and none of the proceedings set forth in
such Item 4 seeks to amend, modify or enjoin the transactions contemplated
------
hereby or is likely to be adversely determined. There is no legislation,
governmental regulation or judicial decision that could result in a Material
Adverse Change.
SECTION 5.8 Regulations G, T, U and X. Neither the Borrower nor
-------------------------
any Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock (as defined in F.R.S. Board Regulation G or U) and, except for the
STI Shares prior to the Merger Consummation Date, no assets of the Borrower or
any Subsidiary consist of Margin Stock. The Loans hereunder will not be used
for a purpose which violates, or would be inconsistent with, F.R.S. Board
Regulation G, T, U or X.
SECTION 5.9 Government Regulation. Neither the Borrower nor any
---------------------
Subsidiary is an "investment company" within the meaning of the Investment
Holding Company Act of 1940, as amended, or a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or
subject to regulation under the Federal Power Act, the Interstate Commerce Act
or any other
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federal or state law limiting its ability to incur Indebtedness or to execute,
deliver or perform the Loan Documents to which it is party.
SECTION 5.10 Taxes. Each of the Borrower and its present or past
-----
Subsidiaries has filed all tax returns and reports required by law to have been
filed by it and has paid all taxes and Charges thereby shown to be owing, except
any such taxes or Charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.
SECTION 5.11 Pension and Welfare Plans. (a) Except as disclosed in
-------------------------
Item 8 (Benefit Plans) of the Disclosure Schedule, neither the Borrower nor any
- ------
Subsidiary or Commonly Controlled Entity has assumed any material liability
under any employee benefit plan, fund, program, arrangement, agreement or
commitment maintained by or on behalf of or contributed to by or on behalf of
any entity or trade or business which, together with any of such corporations,
is treated as a single employer under Sections 414(b), (c), (m) or (o) of the
IRC. Neither the Borrower nor any Subsidiary or Commonly Controlled Entity
shall be subject (directly or indirectly) to any material liability, tax or
penalty whatsoever to any person whomsoever with respect to any employee benefit
plan, fund, program, arrangement, agreement or commitment described in the
immediately preceding sentence.
(b) No Reportable Event which could result in a Material Adverse
Change has occurred during the six-year period prior to the date on which this
representation is made or deemed made with respect to any Single Employer Plan.
The Borrower, each Commonly Controlled Entity, each Subsidiary, each Plan, and
each trust maintained pursuant to any such Plan have complied in all material
respects with the applicable provisions of ERISA, the IRC, and any other
applicable laws. Except as disclosed in Item 8 (Benefit Plans) of the Disclosure
------
Schedule, the present value of all "benefit liabilities" (within the meaning of
Section 4001(a)(16) of ERISA) under each Single Employer Plan maintained by the
Borrower, any Subsidiary or any Commonly Controlled Entity (based on those
assumptions that would be used in a termination of each such Plan) did not, as
of the last annual valuation date for which an actuarial valuation report has
been done, exceed the value of the assets of such Plan as of such date. Except
as disclosed in such Item 8, neither the Borrower nor any Commonly Controlled
------
Entity or Subsidiary has incurred any liability to the PBGC or to any other
Person under Section 4062, 4063 or Section 4064 of ERISA on account of the
termination of, or its withdrawal from, a Single Employer Plan, and no Lien has
been imposed on the assets of the Borrower or any Commonly Controlled Entity or
Subsidiary under Section 4068 of ERISA. To the knowledge of the Borrower and
any Commonly Controlled Entities and Subsidiaries, there does not exist any
event or condition which would permit the institution of proceedings to
terminate any Single Employer Plan pursuant to Section 4042 of ERISA. Except as
disclosed in Item 8 of the
------
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<PAGE>
Disclosure Schedule, no "accumulated funding deficiency" (as defined in Section
302 of ERISA or Section 412 of IRC), whether or not waived, exists with respect
to any Pension Plan. The Borrower and each Commonly Controlled Entity and
Subsidiary have timely made in full each quarterly installment payment to any
Pension Plan required under Section 302(e) of ERISA or Section 412(m) of the IRC
and have also made full and timely payment of any other costs or expenses
related to such a Plan. The Borrower and all Commonly Controlled Entities and
Subsidiaries have made full and timely payment of all contributions to
Multiemployer Plans required under ERISA, the IRC or applicable collective
bargaining agreements. Neither the Borrower nor any Commonly Controlled Entity
or Subsidiary has had a complete or partial withdrawal from any Multiemployer
Pension Plan and the liability to which the Borrower or any Commonly Controlled
Entity or Subsidiary would become subject under ERISA if the Borrower or any
such Commonly Controlled Entity or Subsidiary were to withdraw completely from
all Multiemployer Pension Plans as of the valuation date most closely preceding
the date hereof is not in excess of $200,000. No such Multiemployer Pension
Plan has been terminated or is in Plan Reorganization or ERISA Insolvent, nor,
to the knowledge of the Borrower and any Commonly Controlled Entities and
Subsidiaries, is any such Multiemployer Pension Plan likely to be terminated or
to become in Plan Reorganization or ERISA Insolvent. To the knowledge of the
Borrower and any Commonly Controlled Entities and Subsidiaries, no "accumulated
funding deficiency" (as defined in Section 302 of ERISA or Section 412 of the
IRC), whether or not waived, exists with respect to any Multiemployer Plan. The
present value (determined using assumptions which are reasonable in respect of
the benefits provided and the employees participating) of the aggregate
liability of the Borrower and each Subsidiary and Commonly Controlled Entity for
post-retirement benefits to be provided to their current and former employees
under Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA) is not in excess of $200,000. No written notice of liability has been
received with respect to the Borrower, any of its Subsidiaries, or any Plan for
any "prohibited transaction" (within the meaning of Section 4975 of the IRC or
Section 406 of ERISA), nor has any such prohibited transaction resulting in
material liability to the Borrower or any of its Subsidiaries occurred. Neither
the Borrower nor any Subsidiary or Commonly Controlled Entity will, as a result
of consummating the transactions contemplated by this Agreement (pursuant to the
provisions of the Agreement, by operation of law or otherwise) (i) have incurred
or become liable for any tax assessed by the Internal Revenue Service for any
alleged violations of Section 4975 of the IRC or any civil penalty imposed by
the Department of Labor for any alleged violations of Section 406 of ERISA,
(ii) have caused or permitted to occur any "prohibited transaction" within the
meaning of such Section 4975 of the IRC or Section 406 of ERISA with respect to
any Plan for which no exemption is available or (iii) have incurred any
liability to the PBGC (other than ordinary and usual PBGC premium liability) or
any liability for complete or partial withdrawal to any Multiemployer Plan.
Neither the Holding Company, the Borrower nor any Subsidiary is subject
(directly or indirectly) to, and no facts exist which could subject the
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Holding Company, the Borrower or any Subsidiary (directly or indirectly) to, any
other liability, penalty, tax or lien whatsoever, which could result in a
Material Adverse Change and which is directly or indirectly related to any Plan,
including, but not limited to, liability for any damages or penalties arising
under Title I or Title IV of ERISA, liability for any tax or penalty resulting
from a loss of deduction under Section 404 or 419 of the IRC, any tax or penalty
under chapter 43 of the IRC, or any taxes or penalties under any other
applicable law, but excluding any liability to make contributions or pay
premiums to or under an ongoing Plan before the last due date on which such
contributions or premiums could be paid or made without penalty or to pay
benefits when due in accordance with Plan terms.
SECTION 5.12 Labor Controversies. Except as disclosed in Item 9
------------------- ------
(Labor Controversies) of the Disclosure Schedule, there are no labor
controversies pending or, to the best knowledge of the Borrower, threatened,
relating to the Borrower or any Subsidiary. There is (i) no unfair labor
practice complaint pending against the Borrower, or any of its Subsidiaries or,
to the best knowledge of the Borrower, threatened against any of them, before
the National Labor Relations Board, and no arbitration proceeding arising out of
or under any collective bargaining agreement or the Borrower's internal
grievance procedures is so pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage is pending against
the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries and (iii)
no union representation question existing with respect to the employees of the
Borrower or any of its Subsidiaries. Each of the Borrower and its Subsidiaries
is in compliance in all material respects with all collective bargaining
agreements to which it is subject.
SECTION 5.13 Ownership of Properties; Collateral. (a) Each of the
-----------------------------------
Borrower and its Subsidiaries owns good title to all of its material personal
properties and assets of any nature whatsoever, free and clear of all Liens
except as permitted pursuant to Section 6.2.3.
-------------
(b) The provisions of the Brunswick Security Agreement are effective
to create in favor of the Agent for the benefit of the Agent and the Lenders, a
legal, valid and enforceable security interest in all right, title and interest
of the Loan Parties in the Collateral described therein, and, upon the filing of
the Financing Statements and any required filing in the United States Patent
and Trademark Office pursuant to Section 4.1.8, the Security Documents will
-------------
create a fully perfected first Lien on, and the security interest in, all right,
title and interest of the Loan Parties in all of the Collateral described
therein, to the extent that a security interest therein can be perfected by such
a filing, subject to no other Liens other than Liens permitted by Section 6.2.3.
-------------
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SECTION 5.14 Intellectual Property. Each of the Borrower and its
----------------------
Subsidiaries owns or licenses all such Intellectual Property, and has obtained
assignments of all licenses and other rights, as the Borrower considers
necessary for or as are otherwise material to the conduct of the business of the
Borrower and its Subsidiaries as now conducted without, individually or in the
aggregate, any infringement upon rights of other Persons which could result in a
Material Adverse Change. All Intellectual Property owned or licensed from third
Persons described in this Section 5.14 is set forth in Item 10 (Intellectual
------------ -------
Property) of the Disclosure Schedule.
SECTION 5.15 Accuracy of Information. All factual information
-----------------------
heretofore or contemporaneously furnished by or on behalf of the Borrower in
writing to the Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is true and accurate in every
material respect on the date as of which such information is dated or certified
and as of the date of execution and delivery of this Agreement by the Agent or
such Lender and such information is not incomplete by omitting to state any
material fact necessary to make such information not misleading. Neither this
Agreement nor any document or statement furnished to the Agent or any of the
Lenders by or on behalf of the Borrower contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements contained herein or therein not materially misleading. The Agent and
the Lenders recognize that the Projections are not to be viewed as facts and
that actual results during the period or periods covered by the Projections may
differ from the projected or forecasted results.
SECTION 5.16 Insurance. All policies of insurance in effect of any
---------
kind or nature owned by or issued to the Borrower and its Subsidiaries,
including policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers' compensation,
property and liability insurance, (a) are listed in Item 11 (Insurance) of the
-------
Disclosure Schedule as of the Closing Date, (b) are, together with all policies
of employee health and welfare and title insurance, in full force and effect,
(c) comply in all respects with the applicable requirements set forth herein and
in the Security Documents and (d) are of a nature and provide such coverage as
is customarily carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower and its
Subsidiaries operate. Neither the Borrower nor any of its Subsidiaries provides
any of its insurance through self-insurance except as disclosed in Item 11 of
-------
the Disclosure Schedule.
SECTION 5.17 Certain Indebtedness. Item 12 (Existing Indebtedness)
-------------------- -------
of the Disclosure Schedule sets forth all Indebtedness of Brunswick and its
Subsidiaries as of the Closing Date, which (a) is for borrowed money, or (b) is
not incurred in the ordinary course of the business of the Borrower or any
Subsidiary in a manner and to the extent consistent with past
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practice, or (c) is material to the financial condition, operations, businesses,
properties or prospects of the Borrower or any Subsidiary.
SECTION 5.18 Environmental Matters. Except as disclosed in Item 13
--------------------- -------
(Environmental Matters) of the Disclosure Schedule, the Borrower and each of its
Subsidiaries are in compliance in all material respects with all applicable
Environmental Laws, and to the best of the Borrower's knowledge, there are no
conditions or circumstances associated with the currently or previously owned,
operated, used or leased properties or current or past operations of the
Borrower or any Subsidiary which may give rise to Environmental Liabilities and
Costs which could result in a Material Adverse Change or which may give rise to
any Environmental Lien.
SECTION 5.19 No Burdensome Agreements. Neither the Borrower nor any
------------------------
Subsidiary is a party to or has assumed any indenture, loan or credit agreement
or any lease or other agreement or instrument or subject to any charter or other
corporate restriction that could result in a Material Adverse Change.
SECTION 5.20 Consents. Except as disclosed in Item 14 (Consents) of
-------- -------
the Disclosure Schedule, the Borrower and its Subsidiaries have all material
permits and governmental consents and Regulatory Approvals necessary under
Requirements of Law or, in the reasonable business judgment of the Borrower,
deemed advisable under Requirements of Law, in connection with the transactions
contemplated hereby (including the Acquisition, the Merger and the Loans) and
the ongoing business and operations of the Borrower and its Subsidiaries.
SECTION 5.21 Contracts. Set forth in Item 15 (Contracts) of the
--------- -------
Disclosure Schedule is an accurate and complete list of all material Contractual
Obligations of the Borrower and its Subsidiaries as of the Closing Date. Each
such material Contractual Obligation is in full force and effect in accordance
with the terms thereof. There are no material defaults by the Borrower or any
Subsidiary or, to the Borrower's knowledge after due inquiry, any other default
in existence under any such material Contractual Obligations, in each case that
could result in a Material Adverse Change.
SECTION 5.22 Employment Agreements. Set forth in Item 16
--------------------- -------
(Employment Contracts) of the Disclosure Schedule is a complete and accurate
list of each employment agreement to which the Borrower or any Subsidiary is a
party, or by which it is bound.
SECTION 5.23 Condition of Property. All of the assets and
---------------------
properties owned by, leased to or used by the Borrower and its Subsidiaries
material to the conduct of their
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business are in adequate operating condition and repair, ordinary wear and tear
excepted, and are free and clear of known defects except for defects which do
not substantially interfere with the use thereof in the conduct of normal
operations.
SECTION 5.24 Subsidiaries. Item 17 (Subsidiaries) of the Disclosure
------------ -------
Schedule sets forth all Subsidiaries of Brunswick.
SECTION 5.25 Acquisition Agreement. The closing of the transactions
---------------------
contemplated by the Acquisition Agreement shall occur on the Closing Date
simultaneously with the making of the Bridge Loan, and the Borrower has not
waived or in any way amended, without the prior written consent of the Agent,
any condition to the obligations to consummate the Acquisition. A true and
complete copy of the Acquisition Agreement (including all exhibits, schedules
and amendments thereto) has been delivered to the Agent. The Borrower is not in
default under the Acquisition Agreement or under any instrument or document to
be delivered in connection therewith. The representations and warranties made in
the Acquisition Agreement by the Borrower and, to the best knowledge of the
Borrower, the Estate are true and correct in all material respects on and as of
the Closing Date as though made on and as of such date.
SECTION 5.26 Trade Relations. There exists no actual or, to the
---------------
best of Borrower's knowledge, threatened termination, cancellation or limitation
of, or any modification or change in, the business relationship of the Borrower
with any customer or group of customers of the Borrower.
ARTICLE 6
COVENANTS
SECTION 6.1 Affirmative Covenants. The Borrower agrees with each
---------------------
Lender that until all Obligations (other than Obligations that expressly survive
the termination of this Agreement pursuant to Section 9.5) have been paid and
-----------
performed in full and the Commitments have terminated, the Borrower will perform
the Obligations set forth in this Section 6.1; provided, however, that to the
----------- -------- -------
extent that prior to the Merger Consummation Date any of the Obligations of
Brunswick set forth in this Section 6.1 relate to STI and its Subsidiaries,
-----------
Brunswick's obligation to cause STI or such Subsidiary to perform any act or to
refrain from performing any act shall be subject to Brunswick's fiduciary duties
to the other shareholders of STI.
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SECTION 6.1.1 Financial Information, etc. The Borrower will furnish,
---------------------------
or will cause to be furnished, to each Lender and to the Agent copies of its
financial statements, reports and information:
(a) (i) promptly when available and in any event within ninety (90)
days after the close of each Fiscal Year, a consolidated and consolidating
balance sheet at the close of such Fiscal Year, and related consolidated and
consolidating statements of operations, retained earnings, and cash flows for
such Fiscal Year, of the Borrower and its Subsidiaries (with comparable
information at the close of and for the prior Fiscal Year), certified (in the
case of consolidated statements) without qualification by Arthur Andersen
L.L.P., Price Waterhouse LLP or other independent public accountants
satisfactory to the Agent, together with a report containing management's
discussion and analysis of the financial condition and results of operation of
the Borrower and its Subsidiaries (the delivery by the Borrower to the Agent of
the Borrower's annual report on Form 10-K filed under the Securities Exchange
Act of 1934, as amended, shall satisfy the requirements of this clause (a)(i));
(ii) promptly when available and in any event within ninety (90) days
after the close of each Fiscal Year, a letter report of such independent public
accountants at the close of such Fiscal Year to the effect that it has reviewed
the provisions of this Agreement and the most recent Compliance Certificate
being furnished pursuant to clause (a)(iii) of this Section 6.1.1 and that, in
-------------
the course of performing its duties it did not become aware of any Default or
Event of Default or any miscalculation in such Compliance Certificate relating
to the financial tests set forth in Section 6.2.4 or relating to the calculation
-------------
of Excess Cash Flow, except as such may be disclosed in such statement; and
(iii) promptly when available and in any event within ninety (90)
days after the close of each Fiscal Year, a Compliance Certificate calculated as
of the computation date at the close of such Fiscal Year; and
(b) promptly when available and in any event within forty-five (45)
days after the close of each Fiscal Quarter, consolidated and consolidating
balance sheets at the close of such Fiscal Quarter, and consolidated and
consolidating statements of operations, retained earnings, and cash flows for
such Fiscal Quarter and for the period commencing at the close of the previous
Fiscal Year and ending with the close of such Fiscal Quarter, of the Borrower
and its Subsidiaries (with comparable information at the close of and for the
corresponding Fiscal Quarter of the prior Fiscal Year and for the corresponding
portion of such prior Fiscal Year), certified by the chief executive or
financial officer of the Borrower, together with a brief report containing
management's discussion and analysis of the financial condition and results of
operations of the Borrower and its Subsidiaries (including a discussion and
analysis of any
69
<PAGE>
changes compared to prior results) (the delivery by the Borrower of its
quarterly report with respect to any Fiscal Quarter on Form 10-Q filed under the
Securities Exchange Act of 1934, as amended, shall satisfy the requirements of
this clause (b) with respect to such Fiscal Quarter) (subject to normal
recurring year end adjustments);
(c) promptly when available and in any event within thirty (30) days
after the close of each calendar month of each Fiscal Year (other than a
calendar month that is the last month of a Fiscal Quarter), consolidated and
consolidating balance sheets at the close of such month, and consolidated and
consolidating statements of operations, retained earnings, and cash flows for
such month and for the period commencing at the close of the previous Fiscal
Year and ending with the close of such month, of the Borrower and its
Subsidiaries (with comparable information at the close of and for the
corresponding month of the prior Fiscal Year and for the corresponding portion
of such prior Fiscal Year), certified by the chief executive or financial
officer of the Borrower, together with a brief report containing management's
discussion and analysis of the financial condition and results of operations of
the Borrower and its Subsidiaries (including a discussion and analysis of any
changes compared to prior results);
(d) promptly upon preparation of any update to the business plan
described in clause (g) of this Section 6.1.1 for the remaining term of
-------------
Borrower's then current Fiscal Year as in the Borrower's reasonable judgment is
required, a copy of such update; and
(e) within forty-five (45) days after the close of each Fiscal
Quarter, a Compliance Certificate calculated as of the close of such Fiscal
Quarter;
(f) promptly upon receipt thereof, copies of all detailed financial
and management reports submitted to the Borrower by its independent public
accountants in connection with each annual or interim audit made by such
independent public accountants of the books of the Borrower or any Subsidiary;
(g) within ten (10) days prior to the end of each Fiscal Year of the
Borrower, (i) a business plan of the Borrower and its Subsidiaries, in form,
scope and detail satisfactory to the Agent, and (ii) consolidated and
consolidating operating budgets for the twelve (12) months following the end of
such Fiscal Year, prepared on a monthly basis, and for each Fiscal Year
thereafter through the 2001 Fiscal Year, prepared on an annual basis, which
budgets shall include estimated capital expenditures and other costs to be
incurred by the Borrower and its Subsidiaries, on a consolidated and
consolidating basis, during the applicable Fiscal Year, in each case, with
accompanying detail, together with a report containing management's discussion
and analysis of the projected financial condition and results of operations of
the Borrower and its Subsidiaries;
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<PAGE>
(h) promptly after approved by the Borrower's Board of Directors, any
updates or revisions to any business plan described in clause (g) of this
Section 6.1.1, in addition to those described in clause (d) of this Section
- ------------- -------
6.1.1;
- -----
(i) promptly upon the sending or filing thereof, copies of all reports
that the Borrower sends to its security holders generally, and copies of all
reports and registration statements that the Borrower or any of its Subsidiaries
files with the Securities and Exchange Commission or any national securities
exchange; and
(j) such other information with respect to the financial condition,
business, property, assets, revenues and operations of the Borrower and any
Subsidiary as the Agent or the Required Lenders may from time to time reasonably
request.
SECTION 6.1.2 Maintenance of Corporate Existence, etc. Except as
---------------------------------------
permitted by Section 6.2.10, the Borrower will cause to be done at all times all
--------------
things necessary to maintain and preserve the corporate existence of the
Borrower and each Subsidiary (other than the Inactive Subsidiaries).
SECTION 6.1.3 Foreign Qualification. The Borrower will, and will
---------------------
cause each Subsidiary to, cause to be done at all times all things necessary to
be duly qualified to do business and be in good standing as a foreign
corporation in each jurisdiction where the failure to so qualify could result in
a Material Adverse Change.
SECTION 6.1.4 Payment of Taxes, etc. The Borrower will, and will
---------------------
cause each Subsidiary to, pay and discharge, as the same become due and payable,
(a) all Charges against it or on any of its property, as well as claims of any
kind which, if unpaid, might become a Lien upon any one of its properties, and
(b) all lawful claims for labor, materials, supplies, services or otherwise
before any thereof become a default; provided, however, that the foregoing shall
-------- -------
not require the Borrower or any Subsidiary to pay or discharge any such Charge
or claim so long as it shall be diligently contesting the validity thereof in
good faith by appropriate proceedings and shall have set aside on its books
adequate reserves in accordance with GAAP.
SECTION 6.1.5 Insurance. In addition to any insurance required to be
---------
maintained pursuant to any other Loan Document, the Borrower will, and (with
respect to the insurance described in clauses (a) and (b) below) will cause each
Subsidiary to, maintain or cause to be maintained:
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<PAGE>
(a) insurance with respect to its properties and business against such
casualties, contingencies and liabilities (including, without limitation, in the
case of STI, business interruption insurance) and of such types and in such
amounts as are customary in the industries in which the Borrower and
Subsidiaries are engaged, and will furnish to the Agent annual certification
from the respective insurers (or their authorized agents) of the extent of all
insurance maintained by the Borrower and its Subsidiaries in accordance with
this Section 6.1.5; and
-------------
(b) the "key-man" life insurance policy referred to in Section 4.1.12,
--------------
which policy shall at all times have a minimum face value of not less than
$500,000 in the aggregate.
Each such policy shall be issued by an insurance company with a Best's rating of
"A" or better and a financial size category of not less than XII shall be in
effect on the Closing Date. The premiums for each such policy shall be paid as
such premiums shall come due. All policies of casualty insurance shall contain
an endorsement, in the form submitted to the Borrower by the Agent, showing loss
payable to the Agent, for its benefit and the ratable benefit of the Lenders, as
their interests may appear. All policies of liability insurance, including,
without limitation, all primary and umbrella liability policies, shall name the
Agent, for its benefit and the ratable benefit of the Lenders, as additional
insured. All such insurance policies shall provide, or shall be properly
endorsed to provide, that the insurer shall give the Agent not less than 10 days
prior written notice of any cancellation or non-renewal of any such policy. The
Borrower shall retain all the incidents of ownership of the insurance maintained
pursuant to this Section 6.1.5, but shall not borrow upon or otherwise impair
-------------
its right to receive the proceeds of such insurance. So long as no Event of
Default has occurred and is continuing, the Borrower and its Subsidiaries shall
have the right to use the proceeds of casualty insurance to repair or replace
damaged or destroyed property, shall have the right to use the proceeds of
business interruption insurance for its ongoing business needs and shall have
the right to use the proceeds of liability insurance to pay covered claims.
SECTION 6.1.6 Notice of Default, Litigation, etc. Upon a Responsible
----------------------------------
Officer learning thereof, the Borrower will give prompt written notice (with a
description in reasonable detail) to the Agent of:
(a) the occurrence of any Default;
(b) the occurrence of any litigation, arbitration or governmental
investigation or proceeding not previously disclosed in writing by the Borrower
to the Lenders which has been instituted or, to the knowledge of the Borrower,
is threatened against, the Borrower or any
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<PAGE>
Subsidiary or to which any of its properties, assets or revenues is subject
which, if adversely determined, could result in a Material Adverse Change;
(c) any material development which shall occur in any litigation,
arbitration or governmental investigation or proceeding previously disclosed by
the Borrower to the Lenders pursuant to Section 5.7 which renders such
-----------
litigation, arbitration or governmental investigation likely to be adversely
determined and, if adversely determined, could result in a Material Adverse
Change;
(d) the occurrence of any other circumstance which could result in a
Material Adverse Change;
(e) the occurrence of any Loss; and
(f) (i) the occurrence or expected occurrence of any Reportable Event
with respect to any Single Employer Plan, or any withdrawal from, or the
termination, Plan Reorganization or ERISA Insolvency of any Multiemployer
Pension Plan, (ii) the institution of proceedings or the taking of any other
action by the PBGC or the Borrower or any Commonly Controlled Entity or
Subsidiary or any Multiemployer Pension Plan with respect to the withdrawal
from, or the termination, Plan Reorganization or ERISA Insolvency of, any Single
Employer Plan or Multiemployer Pension Plan, or the receipt of notice by the
Borrower or any Commonly Controlled Entity or Subsidiary that the institution of
any such proceedings or the taking of any such action is under consideration or
anticipated, (iii) the institution of any proceedings or other action by the
Internal Revenue Service or the Department of Labor with respect to the minimum
funding requirements of any Pension Plan, or the receipt of notice by the
Borrower or any Commonly Controlled Entity or Subsidiary that the institution of
any such proceedings or the taking of any such action is under consideration or
anticipated, (iv) the occurrence or expected occurrence of any event which could
result in the incurrence of unpredictable contingent event benefits under
Section 302 of ERISA or Section 412 of the IRC with respect to any Pension Plan,
(v) any event or condition which could increase the liability of the Borrower or
any Commonly Controlled Entity or Subsidiary with respect to post-retirement
welfare benefits under any Plan, or (vi) the occurrence of any other event or
condition with respect to any Plan which could subject the Borrower or any
Subsidiary (directly or indirectly) to any tax, penalty or liability under Title
I or Title IV of ERISA, Section 404 or 419 and Chapter 43 of the IRC, or any
other applicable laws, and in each case in clauses (i) through (vi) above, such
event or condition, together with all other events or conditions, if any, could
subject the Borrower or any Subsidiary (directly or indirectly) to any tax,
fine, penalty, or other liabilities in amounts which in the aggregate could
result in a Material Adverse Change. Upon the request of the Agent, the Borrower
will deliver to each of the Lenders a true and
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<PAGE>
complete copy of each annual report (Form 5500) of each Plan (other than a
Multi-Employer Plan) required to be filed with the Internal Revenue Service,
promptly after the filing thereof; and
(g) the condemnation or threat of condemnation with respect to any
property used or necessary in the conduct of the businesses of the Borrower or
any of its Subsidiaries.
SECTION 6.1.7 Books and Records. The Borrower will, and will cause
-----------------
each Subsidiary to, keep books and records reflecting all of its business
affairs and transactions in accordance with GAAP and, subject to any government
security limitations, permit the Agent and each Lender or any of their
respective representatives upon one Business Day's notice, during normal
business hours, to visit all of its offices, to discuss its financial matters
with its officers and independent public accountants and to examine (and, at the
expense of the Borrower, photocopy extracts from) any of its books or other
corporate records. The Borrower shall pay any fees of its independent public
accountants incurred in connection with the Agent's or any Lender's exercise of
its rights pursuant to this Section 6.1.7; provided that unless an Event of
-------------
Default shall have occurred and be continuing, the Borrower shall be required to
pay any such fees only in respect of the Agent's exercise of its rights pursuant
to this Section 6.1.7 for one occasion during each Fiscal Year. On or prior to
-------------
the Closing Date (and upon consummation of the Merger) the Borrower will deliver
a letter to its independent public accountants authorizing such public
accountants to discuss the Borrower's financial matters with the Agent and each
Lender or any of their respective representatives whether or not a
representative of the Borrower is present; provided that the Borrower shall have
been given prior notice and an opportunity to be present.
SECTION 6.1.8 Maintenance of Properties, Etc. The Borrower will
------------------------------
maintain and preserve, and cause each of its Subsidiaries to maintain and
preserve, all of its properties (real and personal and including all intangible
assets), except obsolete properties, which are used or necessary in the conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
SECTION 6.1.9 Maintenance of Licenses and Permits. The Borrower will
-----------------------------------
maintain and preserve, and will cause each of its Subsidiaries to maintain and
preserve, all Intellectual Property, rights, permits, licenses, Regulatory
Approvals and privileges issued under or arising under any Requirements of Law
to the extent material to the conduct of the business of the Borrower or any of
its Subsidiaries.
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<PAGE>
SECTION 6.1.10 Employee Plans. The Borrower will at all times comply
--------------
in all material respects with the provisions of ERISA and the IRC which are
applicable to any of the Plans, and cause each of its Subsidiaries so to do.
SECTION 6.1.11 Environmental Management. The Borrower will adopt and
------------------------
maintain prudent solid and hazardous waste management and disposal practices,
including at a minimum such practices as are required or dictated from time to
time by current and future Environmental Laws and Environmental Permits.
SECTION 6.1.12 Compliance with Laws. The Borrower will, and will
--------------------
cause each Subsidiary to, comply with all applicable Requirements of Law;
provided, however, that this Section 6.1.12 shall not apply to any circumstance
- -------- ------- --------------
of noncompliance that together with all other noncompliance could not result in
a Material Adverse Change.
SECTION 6.1.13 Interest Rate Protection. Within 90 days after the
------------------------
Merger Consummation Date, the Borrower shall obtain and thereafter maintain in
full force and effect, from ING or an Eligible Lending Institution, one or more
Interest Rate Contracts, protecting the Borrower against increases in the
Eurodollar Rate for an aggregate notional amount equal to 50% of the aggregate
principal amount of the Term Loan for a term of five (5) years. ING shall make
available to the Borrower various proposals for Interest Rate Contracts. Should
the Borrower obtain any proposal for Interest Rate Contracts from a source other
than ING, the Borrower agrees that ING shall have a right to provide such
Interest Rate Contracts on the same terms as those set forth in such proposal.
The Borrower will collaterally assign such Interest Rate Contracts to the Agent,
for its benefit and the ratable benefit of the Lenders, pursuant to
documentation acceptable to the Agent.
SECTION 6.1.14 Real Estate. If the Borrower shall acquire a fee
-----------
interest in real estate which the Agent reasonably designates as material to the
Borrower or a leasehold interest in real estate with respect to which the
Borrower shall have made substantial tenant improvements or improvements
uniquely configured for the Borrower's business requirements, in either case, at
any time prior to the date on which all Commitments have terminated and all
Obligations under this Agreement have been paid in full, the Borrower will
execute a Mortgage subject only to the Liens described in clauses (c) and (h) of
Section 6.2.3, in form and substance satisfactory to the Agent, in favor of the
- -------------
Agent, for its benefit and the ratable benefit of the Lenders, and shall use its
reasonable efforts to deliver to the Agent such title insurance policies,
surveys and landlords' estoppel agreements with respect thereto as the Agent
shall reasonably request.
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<PAGE>
SECTION 6.1.15 Merger of Brunswick into STI. Brunswick shall use its
----------------------------
best efforts to merge with and into STI, with STI being the surviving
corporation, to cause STI to take any action required to be taken in order that
the conditions set forth in Sections 4.2 and 4.3 are satisfied on or prior to
------------ ---
the Stated Maturity Date for the Bridge Loan, and to cause STI to refrain from
taking any action if the result of such action would be to prevent any
conditions set forth in Section 4.2 or 4.3 from being met on or prior to the
----------- ---
Maturity Date for the Bridge Loan or at any time thereafter.
SECTION 6.1.16 Cash Reserve Account. The Borrower agrees to establish
--------------------
the Cash Reserve Account for the benefit of the Agent. The Borrower hereby
irrevocably authorizes the Agent to withdraw funds from the Cash Reserve Account
at any time that accrued and unpaid interest with respect to the Bridge Loan has
become due and payable and to apply such funds to the payment of such interest.
SECTION 6.1.17. Private Placements. The Borrower hereby grants to
------------------
ING a right of first refusal for a period of one year following the Closing Date
to manage and serve as placement agent, on an exclusive basis, in assisting the
Borrower in any private placement of debt securities. In the event that the
Borrower desires to issue through a private placement debt securities to
institutional investors, the Borrower shall, prior to entering into any
agreement with any other party in connection with such issuance, give notice to
ING of the terms of such issuance. ING shall have the right to manage and serve
as placement agent, on an exclusive basis, in connection with such private
placement of debt securities on terms that are at least as favorable to the
Borrower as the terms of any proposal made by any other party. Once ING has
exercised its rights to manage and serve as placement agent, the Borrower agrees
that it shall use its best efforts to assist ING in its efforts to place such
debt securities on the Borrower's behalf.
SECTION 6.2 Negative Covenants. The Borrower agrees with each
------------------
Lender that until all Commitments have terminated and all Obligations (other
than Obligations that expressly survive the termination of this Agreement
pursuant to Section 9.5) have been paid and performed in full, the Borrower will
-----------
perform the Obligations set forth in this Section 6.2. provided, however, that
------------ -------- -------
to the extent that prior to the Merger Consummation Date any of the Obligations
of Brunswick set forth in this Section 6.1 relate to STI and its Subsidiaries,
-----------
Brunswick's obligation to cause STI or such Subsidiary to perform any act or to
refrain from performing any act shall be subject to Brunswick's fiduciary duties
to the other shareholders of STI.
SECTION 6.2.1 Business Activities. The Borrower will not, and will
-------------------
not permit any Subsidiary to, engage in any business activity, except those in
the fields in which the
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<PAGE>
Borrower and its Subsidiaries are engaged on the Closing Date and such
activities as may be incidental or related thereto.
SECTION 6.2.2 Indebtedness. The Borrower will not, and will not
------------
permit any Subsidiary to, create, incur, assume or suffer to exist or otherwise
become or be liable in respect of any Indebtedness other than:
(a) Indebtedness in respect of the Loans and other Obligations;
(b) Indebtedness in respect of the Interest Rate Contracts required
pursuant to Section 6.1.13 to the extent such do not constitute Obligations;
--------------
(c) obligations that constitute Indebtedness solely by virtue of being
secured by Liens permitted under Section 6.2.3;
-------------
(d) Indebtedness in respect of liabilities resulting from (i)
endorsements of negotiable instruments in the ordinary course of business; and
(ii) surety bonds and other bonds issued for the Borrower's account in the
ordinary course of business;
(e) Indebtedness of Brunswick and its Subsidiaries existing on the
Closing Date and set forth in Item 12 (Existing Indebtedness) of the Disclosure
-------
Schedule, excluding, however, from and after the Merger Consummation Date (i)
Indebtedness owed to Syntex Laboratories, Inc. unless prior to the Merger
Consummation Date, Syntex Laboratories, Inc. expressly agrees, in form and
substance satisfactory to the Agent, that (A) the Agent may be granted a lien on
the property subject to a lien in favor of Syntex Laboratories, Inc. and (B)
Syntex Laboratories, Inc. enters into an intercreditor agreement, in form and
substance satisfactory to the Agent, pursuant to which Syntex Laboratories, Inc.
will agree, among other things, to give the Agent notice of any default under
such Indebtedness and, upon request by any Lender, to sell such Indebtedness to
such Lender for the principal amount then outstanding, plus accrued and unpaid
interest, but without premium or penalty, and (ii) such Indebtedness set forth
in Item 3 (Indebtedness of STI to be Refinanced) of the Disclosure Schedule.
(f) Indebtedness of any Subsidiary (other than an Inactive Subsidiary)
owing to the Borrower, provided that such Indebtedness is evidenced by a demand
promissory note that is pledged to the Agent, for its benefit and the benefit of
the Lenders, as security for the Obligations pursuant to the Pledge Agreement;
(g) Capitalized Lease Liabilities incurred after the Closing Date;
provided that (i) the aggregate amount of such Capitalized Lease Liabilities
- --------
incurred by the Borrower and its
77
<PAGE>
Subsidiaries during any Fiscal Year which in accordance with GAAP is
attributable to principal, together with the aggregate principal amount of all
Purchase Money Indebtedness of the Borrower and its Subsidiaries incurred during
such Fiscal Year, does not exceed $1,000,000, (ii) payments under each
capitalized lease giving rise to such Capitalized Lease Liabilities shall be
made in equal periodic installments, (iii) the original term of each capitalized
lease giving rise to such Capitalized Lease Liabilities shall not be less than
seventy-five percent (75%) of the useful life of the item of property for which
such Capitalized Lease Liabilities are incurred and (iv) the Consolidated
Capital Expenditures financed by such Capitalized Lease Liabilities are not
prohibited under Section 6.2.5;
-------------
(h) Purchase Money Indebtedness incurred after the Closing Date;
provided that (i) the aggregate amount of such Indebtedness incurred by the
- --------
Borrower and its Subsidiaries during any Fiscal Year, together with the
aggregate amount of any Capitalized Lease Liabilities of the Borrower and its
Subsidiaries incurred during such Fiscal Year that in accordance with GAAP is
attributable to principal, does not exceed $1,000,000, (ii) such Indebtedness
provides for the payment of principal in equal periodic installments, (iii) each
issue of such Purchase Money Indebtedness shall have an original term that is
not less than seventy-five (75%) of the useful life of the item of property for
which such Purchase Money Indebtedness is incurred, and (iv) the Consolidated
Capital Expenditures financed by such Purchase Money Indebtedness are not
prohibited under Section 6.2.5;
-------------
(i) Indebtedness evidenced by the Estate Subordinated Note;
(j) Indebtedness evidenced by the Junior Subordinated Note;
(k) extensions, refinancings, replacements and renewals of any of the
foregoing Indebtedness described in clause (e) (other than Capitalized Lease
Liabilities) and clause (i) of this Section 6.2.2; provided that the principal
------------- --------
amount thereof is not increased, such extension, refinancing, replacement or
renewal does not impose more burdensome terms upon the Borrower or its
Subsidiaries, as the case may be, than the Indebtedness being extended,
refinanced, replaced or renewed and, in the case of any Indebtedness that
constitutes an extension, refinancing, replacement or renewal of the Estate
Subordinated Note, such Indebtedness does not have a stated final maturity that
is earlier than the Stated Maturity Date for the Term Loan, such Indebtedness
does not require any principal amortization and such Indebtedness otherwise is
subordinated in right of payment to the prior payment of "Senior Debt" (as such
term is defined in the Estate Subordinated Note as in effect on the Closing
Date) to the same extent and in the same manner as the Estate Subordinated Note.
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<PAGE>
SECTION 6.2.3 Liens. The Borrower will not, and will not permit any
-----
Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of its
property, revenues or assets, whether now owned or hereafter acquired, except:
(a) Liens in favor of the Agent or the Lenders granted pursuant to any
Loan Document;
(b) Liens identified in Item 19 of the Disclosure Schedule, excluding,
-------
however, from and after the Merger Consummation Date, (i) Liens in favor of
First Pennsylvania Bank, which the Borrower agrees to have promptly terminated
after the Closing Date, and (ii) Liens in favor of Merrill Lynch Business
Financial Services, Inc.;
(c) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable with penalty or being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books;
(d) Liens of carriers, warehousemen, mechanics, and materialmen
incurred in the ordinary course of business for sums not overdue or being
contested in good faith by appropriate proceedings (which proceedings have the
effect of preventing the forfeiture or sale of the asset subject to such Lien)
and for which adequate reserves shall have been set aside on its books;
(e) Liens (other than Liens arising under ERISA or Section 412(n) of
the Code) incurred in the ordinary course of business in connection with
workmen's compensation, unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders, statutory
obligations, leases and contracts (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety or appeal
bonds;
(f) judgment Liens with respect to judgments to the extent such
judgments do not constitute an Event of Default described in Section 7.1.9;
-------------
(g) Liens which arise by operation of law under Article 2 of the UCC
in favor of unpaid sellers of goods, or liens in items or any accompanying
documents or proceeds of either arising by operation of law under Article 4 of
the UCC in favor of a collecting bank;
(h) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments,
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<PAGE>
variations and other restrictions, charges or encumbrances (whether or not
recorded) affecting the use of property, which do not materially detract from
the value of such property or impair the use thereof;
(i) Liens upon any equipment acquired by the Borrower or any of its
Subsidiaries after the Closing Date to secure Indebtedness permitted under
clause (h) of Section 6.2.2 or arising by virtue of a capital lease permitted
-------------
under clause (g) of Section 6.2.2;
-------------
(j) Leases and subleases granted to others in the ordinary course of
business not interfering in any material respect with any business of the
Borrower or any of its Subsidiaries;
(k) Liens which constitute rights of set-off of a customary nature or
bankers' liens with respect to amounts on deposit, whether arising by operation
of law or by contract, in connection with arrangements entered into with banks
in the ordinary course of business; and
(l) Liens consisting of precautionary UCC-1 filings in respect of
operating leases to the extent permitted under Section 6.2.6;
-------------
(m) the Lien on the STI Shares in favor of the Estate to the extent
arising pursuant to the Estate Stock Pledge Agreement, and subordinated to the
Lien of the Agent in the STI shares on the terms and conditions set forth
therein; and
(n) extensions, renewals or replacements of any Lien referred to in
clause (b) of this Section 6.2.3, other than any Lien granted to Syntex
-------------
Laboratories, Inc., provided that the principal amount of the obligation secured
thereby is not increased and that any such extension, renewal or replacement is
limited to the property originally encumbered thereby.
SECTION 6.2.4 Financial Condition. From and after the Merger
-------------------
Consummation Date, the Borrower hereby covenants and agrees as set forth below:
(a) Senior Debt Leverage Ratio. The Borrower will not permit its
--------------------------
Senior Debt Leverage Ratio with respect to the twelve-month period ending on the
last day of any Fiscal Quarter to be greater than the ratio set forth opposite
such Fiscal Quarter (for each Fiscal Quarter ending prior to the first
anniversary of the Merger Consummation Date, such ratio to be calculated as
provided in clause (g) of this Section 6.2.4):
-------------
80
<PAGE>
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Ratio
- --------------------------------- -------
<S> <C>
October 31, 1996 3.2:1.0
January 31, 1997 2.8:1.0
April 30, 1997 2.5:1.0
July 31, 1997 2.1:1.0
October 31, 1997 1.8:1.0
January 31, 1998 1.5:1.0
April 30, 1998 1.3:1.0
July 31, 1998 1.1:1.0
October 31, 1998 1.0:1.0
January 31, 1999 0.9:1.0
April 30, 1999 0.8:1.0
July 31, 1999 and thereafter 0.7:1.0
</TABLE>
(b) Total Debt Leverage Ratio. The Borrower will not permit its Total
-------------------------
Debt Leverage Ratio with respect to the twelve-month period ending on the last
day of any Fiscal Quarter to be greater than the ratio set forth opposite such
Fiscal Quarter (for each Fiscal Quarter ending prior to the first anniversary of
the Merger Consummation Date, to be calculated as provided in clause (g) of this
Section 6.2.4):
- -------------
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Ratio
- --------------------------------- -------
<S> <C>
October 31, 1996 5.0:1.0
January 31, 1997 4.5:1.0
April 30, 1997 3.6:1.0
July 31, 1997 3.0:1.0
October 31, 1997 2.7:1.0
January 31, 1998 2.3:1.0
April 30, 1998 2.0:1.0
July 31, 1998 1.7:1.0
October 31, 1998 1.6:1.0
January 31, 1999 1.4:1.0
April 30, 1999 1.3:1.0
July 31, 1999 and thereafter 1.2:1.0
</TABLE>
(c) Senior Debt Service Ratio. The Borrower will not permit its
-------------------------
Senior Debt Service Ratio with respect to the twelve-month period ending on the
last day of any Fiscal Quarter to be less than the ratio set forth below
opposite such Fiscal Quarter (for each Fiscal
81
<PAGE>
Quarter ending prior to the first anniversary of the Merger Consummation Date,
such ratio to be calculated as provided in clause (g) of this Section 6.2.4):
-------------
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Ratio
- --------------------------------- -------
<S> <C>
October 31, 1996 3.5:1.0
January 31, 1997 3.8:1.0
April 30, 1997 3.9:1.0
July 31, 1997 4.0:1.0
October 31, 1997 3.4:1.0
January 31, 1998 3.1:1.0
April 30, 1998 3.2:1.0
July 31, 1998 3.5:1.0
October 31, 1998 3.7:1.0
January 31, 1999 4.1:1.0
April 30, 1999 4.4:1.0
July 31, 1999 and thereafter 4.8:1.0
</TABLE>
(d) Interest Coverage Ratio. The Borrower will not permit its
-----------------------
Interest Coverage Ratio with respect to the twelve-month period ending on the
last day of any Fiscal Quarter to be less than the ratio set forth below
opposite such Fiscal Quarter (for each Fiscal Quarter ending prior to the first
anniversary of the Merger Consummation Date, such ratio to be calculated as
provided in clause (g) of this Section 6.2.4):
-------------
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Ratio
- --------------------------------- -------
<S> <C>
October 31, 1996 3.0:1.0
January 31, 1997 3.5:1.0
April 30, 1997 4.0:1.0
July 31, 1997 5.0:1.0
October 31, 1997 5.8:1.0
January 31, 1998 6.3:1.0
April 30, 1998 7.3:1.0
July 31, 1998 7.5:1.0
October 31, 1998 7.0:1.0
January 31, 1999 6.9:1.0
April 30, 1999 6.8:1.0
July 31, 1999 and thereafter 7.5:1.0
</TABLE>
82
<PAGE>
(e) Net Worth. The Borrower will not permit its net worth determined
---------
in accordance with GAAP as of the last day of any Fiscal Quarter, commencing
with the Fiscal Quarter ending on July 31, 1996 and continuing thereafter, to be
less than (1) $19,500,000 plus (2) 75% of Net Income (but not loss) for each
Fiscal Quarter ending after July 31, 1996 through and including the last day of
the Fiscal Quarter in which this covenant is being tested; provided, however,
-------- -------
that the amount set forth in clause (1) above shall be reduced by the amount, if
any, by which any goodwill resulting from the Merger is allocated to research
and development and is expensed by the Company on its income statement for the
Fiscal Quarter during which the Merger occurs.
(f) EBITDA. The Borrower will not permit EBITDA for the twelve-month
------
period ending on the last day of any Fiscal Quarter to be less than the amount
set forth opposite such Fiscal Quarter (for each Fiscal Quarter ending prior to
the first anniversary of the Merger Consummation Date, such amount to be
calculated as provided in clause (g) of this Section 6.2.4):
-------------
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Amount
--------------------- ----------
<S> <C>
October 31, 1996 $ 5,000,000
January 31, 1997 $ 5,500,000
April 30, 1997 $ 6,500,000
July 31, 1997 $ 8,000,000
October 31, 1997 $ 8,500,000
January 31, 1998 $ 9,000,000
April 30, 1998 $10,000,000
July 31, 1998 $11,500,000
October 31, 1998 $12,000,000
January 31, 1999 $13,000,000
April 30, 1999 $14,000,000
July 31, 1999 and thereafter $15,000,000
</TABLE>
(g) Calculations for Stub Periods. Notwithstanding anything contained
-----------------------------
herein to the contrary, calculation of all items relating to income or expense
(including, without limitation, EBITDA and Interest Expense) for any period
ending prior to the first anniversary of the Merger Consummation Date shall be
made by annualizing all items relating to income or expense for the period
consisting of the full Fiscal Quarter(s) elapsed from the Merger Consummation
Date to the end of such period and by using the actual scheduled repayments of
Indebtedness occurring during such period.
83
<PAGE>
SECTION 6.2.5 Capital Expenditures. The Borrower will not, and will
---------------------
not permit any Subsidiary to make or commit to make Consolidated Capital
Expenditures, except that, during any Fiscal Year, the Borrower and its
Subsidiaries may make Consolidated Capital Expenditures (including the amount of
Capitalized Lease Liabilities incurred during such Fiscal Year that in
accordance with GAAP is attributable to principal) which in the aggregate do not
exceed the amount set forth below opposite such Fiscal Year (in the case of the
1996 Fiscal Year, for the period commencing on the Closing Date and ending on
July 31, 1996):
<TABLE>
<CAPTION>
Fiscal Year: Amount
- -------------- ----------
<S> <C>
1996 $3,500,000
1997 $2,000,000
1998 $2,500,000
1999 $3,000,000
2000 $3,000,000
2001 $3,000,000
</TABLE>
provided further, however, that expenditures from insurance proceeds received
- -------- ------- -------
upon the occurrence of a Loss which are made to replace or repair damaged or
destroyed assets will not be included in the foregoing calculation.
SECTION 6.2.6 Lease Obligations. The Borrower will not, and will not
-----------------
permit any Subsidiary to, create or suffer to exist any obligation for the
payment of rent for any property under any operating lease or agreement to lease
having a term of one year or more, except for (a) leases in existence on the
Closing Date and described in Item 20 (Leases) of the Disclosure Schedule, and
-------
(b) any lease of real property entered into by the Borrower or any Subsidiary
after the Closing Date in the ordinary course of business; provided, however,
-------- -------
that no such lease shall subject the Borrower or any Subsidiary to Environmental
Liabilities and Costs and that the aggregate amount of payments due from the
Borrower and its Subsidiaries for all leases referred to in this Section 6.2.6
-------------
during any Fiscal Year set forth below is less than the amount set forth below
opposite such Fiscal Year (in the case of the 1996 Fiscal Year, for the period
commencing on the Closing Date and ending on July 31, 1996):
84
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year: Amount
------------ ----------
<S> <C>
1996 $1,000,000
1997 $1,000,000
1998 $1,250,000
1999 $1,250,000
2000 $1,250,000
2001 $1,250,000
</TABLE>
SECTION 6.2.7 Investments. The Borrower will not, and will not
-----------
permit any Subsidiary to, make, incur, assume or suffer to exist any Investment
in any other Person except:
(a) Cash Equivalent Investments;
(b) deposits for utilities, security deposits under leases and similar
prepaid expenses;
(c) accounts receivable arising in the ordinary course of business;
(d) Investments existing on the Closing Date and disclosed in Item 21
-------
(Existing Investments) of the Disclosure Schedule;
(e) Investments in the form of Indebtedness made by the Borrower in
its Subsidiaries (other than Inactive Subsidiaries) to the extent such
Investments are evidenced by demand promissory notes in principal amounts equal
to the amount of such Investments, payable to the Borrower and pledged by the
Borrower in favor of the Agent pursuant to the Pledge Agreements;
(f) Investments in the form of equity made by the Borrower in its
Subsidiaries (other than Inactive Subsidiaries) to the extent permitted under
subsection (b) of Section 6.2.10;
--------------
(g) Investments (including debt obligations) received in connection
with a bankruptcy or reorganization of customers or suppliers and in settlement
of delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business, provided that if such Investments
are evidenced by promissory notes or other instruments, and such instruments are
pledged to the Agent, for its benefit and the benefit of the Lenders;
85
<PAGE>
(h) Investments arising under Interest Rate Contracts; and
(i) Investments consisting of deposit accounts of the Borrower and its
Subsidiaries maintained in the ordinary course of business.
SECTION 6.2.8 Restricted Payments, etc. The Borrower will not
------------------------
declare, pay or make any dividend or distribution (in cash, property or
obligations) on any shares of any class of Stock (now or hereafter outstanding)
of the Borrower or on any warrants, options or other rights in respect of any
class of Stock (now or hereafter outstanding) of the Borrower or apply, or
permit any Subsidiary to apply, any of its funds, property or assets to the
purchase, redemption, sinking fund or other retirement of any shares of any
class of Stock (now or hereafter outstanding), of the Borrower or any
Subsidiary, or make any deposit for any of the foregoing; provided, however,
-------- -------
that (i) the Borrower may redeem Series D Preferred Stock from the State of
Maryland in accordance with the terms of the Stock Purchase Agreement between
Brunswick and the State of Maryland as in effect on the Closing Date and (ii)
after the Merger Consummation Date, the Borrower may redeem restricted shares of
Stock from any officer or employee who has purchased such restricted shares of
Stock since the Merger Consummation Date, provided that the Borrower may not
--------
redeem such restricted shares of Stock for more than the purchase price paid by
such officer or employee for such restricted shares of Stock.
SECTION 6.2.9 Take or Pay Contracts; Sale/Leasebacks. (a) The
--------------------------------------
Borrower will not, and will not permit any Subsidiary to, enter into or be a
party to any arrangement for the purchase of materials, supplies, other property
or services if such arrangement by its express terms requires that payment be
made by the Borrower or such Subsidiary regardless of whether or not such
materials, supplies, other properties or services are delivered or furnished to
it.
(b) The Borrower will not enter into, or permit any Subsidiary to
enter into, any arrangement with any Person providing for the leasing by the
Borrower or one or more Subsidiaries of any property or assets, which property
or assets has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person except as permitted by Section 6.2.2(g).
----------------
SECTION 6.2.10 Consolidation, Merger, Subsidiaries, etc. (a) The
-----------------------------------------
Borrower will not, and will not permit any Subsidiary to, liquidate or dissolve,
consolidate with, or merge into or with, any Person, or purchase or otherwise
acquire all or substantially all of the assets or any Person (or of any
operating division or unit thereof), except that (i) any such Subsidiary may
liquidate or dissolve voluntarily into, and may merge with and into, the
Borrower or any wholly-owned Subsidiary other than an Inactive Subsidiary (so
long as the Borrower or such wholly-owned Subsidiary is the surviving
corporation), and (ii) Brunswick and STI may
86
<PAGE>
consummate the Merger provided that they simultaneously comply with the
conditions set forth in Section 4.2 and Section 4.3.
----------- -----------
(b) The Borrower will not, and will not permit any Subsidiary to,
create any Subsidiary or transfer any assets to any Subsidiary; provided,
--------
however, that the Borrower or any Subsidiary may create or transfer assets to
- -------
any Subsidiary, provided that neither Brunswick nor any Subsidiary shall
transfer more than 20% of its respective assets to Subsidiaries, in the
aggregate and, to the extent any new Subsidiary is created, such Subsidiary
executes and delivers to the Agent, for its benefit and the ratable benefit of
the Lenders, (i) security agreements, collateral assignments, pledge agreements,
UCC financing statements and other documents, all substantially in the form of
the Security Documents executed and delivered as of the Closing Date, granting
to the Agent, for its benefit and the ratable benefit of the Lenders, Liens on
all of its assets subject only to Liens permitted under Section 6.2.3 and (ii) a
-------------
guaranty in substantially the form of the Brunswick Subsidiary Guaranty executed
and delivered as of the Closing Date.
SECTION 6.2.11 Asset Dispositions, etc. The Borrower will not, and
------------------------
will not permit any Subsidiary to, sell, transfer, lease or otherwise dispose
of, or grant options, warrants or other rights with respect to, any of its
assets (including accounts receivable and capital stock of Subsidiaries) to any
Person, unless (a) such disposition is made in the ordinary course of business
and consists of inventories; or (b) such disposition constitutes a disposition
of obsolete or retired assets no longer used in the business of the Borrower and
its Subsidiaries.
SECTION 6.2.12 Modification of Organic Documents, etc. The Borrower
---------------------------------------
will not consent to any amendment, supplement or other modification of any of
the terms or provisions contained in, or applicable to, the charter or the by-
laws of the Borrower, except for any amendment, supplement or other modification
which does not adversely affect the Borrower's ability to pay or perform the
Obligations.
SECTION 6.2.13 Transactions with Affiliates. The Borrower will not,
----------------------------
and will not permit any Subsidiary to, enter into, or cause, suffer or permit to
exist:
(a) any arrangement or contract with any of its Affiliates (other than
its Subsidiaries) of a nature customarily entered into by Persons which are
Affiliates of each other (including management or similar contracts or
arrangements relating to the allocation of revenues, expenses or otherwise)
requiring any payments to be made by the Borrower or any Subsidiaries to any
such Affiliate, other than the transactions provided for in the Loan Documents;
and
87
<PAGE>
(b) any other transaction, arrangement or contract with any of its
Affiliates which is on terms which are less favorable than are obtainable from
any Person which is not one of its Affiliates.
SECTION 6.2.14 Inconsistent Agreements. The Borrower will not, and
-----------------------
will not permit any Subsidiary to, enter into any material agreement containing
any provision which would be violated or breached in any material respect by any
Loan or by the performance by the Borrower or any Subsidiary of its obligations
hereunder or under any Loan Document.
SECTION 6.2.15 Change in Accounting Method. The Borrower will not,
---------------------------
and will not permit any Subsidiary to, make any change in accounting treatment
and reporting practices except as required by GAAP.
SECTION 6.2.16 Change in Fiscal Year End. The Borrower will not
-------------------------
change its Fiscal Year end without the Required Lenders' prior written consent,
which consent will not be unreasonably withheld but will not be given with
respect to more than one such change during the term of this Agreement, except
that Brunswick may change its Fiscal Year end to July 31 as a result of or in
contemplation of the Merger.
SECTION 6.2.17 Compliance with ERISA. The Borrower will not, and
---------------------
will not permit any Subsidiary to take, or fail to take, any action with respect
to a Plan, including establishing, amending, or terminating or withdrawing from
any Plan, without first obtaining the Agent's written consent, where such action
or failure to act could result in any liabilities under the IRC, ERISA, or any
other applicable law which individually or in the aggregate could result in a
Material Adverse Change.
SECTION 6.2.18 Limitation on Restrictions on Subsidiary Dividends.
--------------------------------------------------
The Borrower will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make other distributions on its Stock or other interests or
participations in profits owned by the Borrower or any Subsidiary of the
Borrower or pay any Indebtedness owed to the Borrower or any Subsidiary of the
Borrower, (b) make loans or advances to the Borrower or any Subsidiary of the
Borrower or (c) transfer any of its property or assets to the Borrower or any
Subsidiary of the Borrower, except for such encumbrances and restrictions
existing under or by reason of this Agreement and the other Loan Documents.
88
<PAGE>
SECTION 6.2.19. Modification of Certain Documents. The Borrower
---------------------------------
shall not amend or modify, or consent to any amendment or modification of, any
of the terms of the Estate Subordinated Note, the Junior Subordinated Note or
the Estate Stock Pledge Agreement, the effect of which is to (i) increase the
principal amount thereof, (ii) increase the interest rate applicable thereto, or
cause any accrued interest thereon to be payable in cash at any time prior to
the second anniversary of the Closing Date, (iii) alter or in any way modify the
subordination provisions thereof (together with any definitions used therein),
(iv) require any amortization of principal or any prepayment of interest, (v)
impose on the Borrower or any of its Subsidiaries any additional or more
burdensome obligations or covenants, (vi) impose on the Borrower any additional
or more burdensome events of default or other events or conditions the effect of
which would be to accelerate, or to permit the acceleration of, the stated
maturity of the Estate Subordinated Note or the Junior Subordinated Note (or to
permit any holder thereof to require the Borrower to redeem or repurchase the
Estate Subordinated Note or the Junior Subordinated Note) or to allow the Estate
(or any successor thereto) to exercise any remedies under the Estate Stock
Pledge Agreement, (vii) modify the Estate Stock Pledge Agreement in any manner
such that the Lien granted pursuant thereto is not released upon consummation of
the Merger, or (viii) adversely affect any right or interest of the Agent or any
Lender.
SECTION 6.2.20. Prohibition on Voluntary Prepayments on Subordinated
----------------------------------------------------
Indebtedness. The Borrower will not, and will not permit any of its
- ------------
Subsidiaries to, make any voluntary or optional payment or prepayment on, or
redemption or acquisition for value of the Estate Subordinated Note, the Junior
Subordinated Note or any Indebtedness incurred to refinance the Estate
Subordinated Note (as permitted pursuant to clause (k) of Section 6.2.2);
-------------
provided, however, that the Borrower may repay the Estate Subordinated Note to
- -------- -------
the extent such payment is required pursuant to Section 4.1 of the Estate
Subordinated Note as in effect on the Closing Date.
SECTION 6.2.21. Prohibition on Actions Triggering Redemption of
-----------------------------------------------
Series D Stock. The Borrower will not relocate its office located in the State
- --------------
of Maryland on the Closing Date to any location outside the State of Maryland or
take any other action that would permit the State of Maryland to require the
redemption of the Series D Preferred Stock.
89
<PAGE>
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.1 Events of Default. The term "Event of Default" shall
----------------- ----------------
mean any of the events set forth in this Section 7.1.
-----------
SECTION 7.1.1 Non-Payment of Obligations. The Borrower shall default:
--------------------------
(a) in the payment or prepayment when due of any principal of any
Loan;
(b) in the payment when due of the interest payable in respect of any
Loan, the commitment fee provided for in Section 2.4 hereof and such default
-----------
shall continue unremedied for a period of five (5) days; or
(c) in the payment when due of any Obligation (other than an
Obligation referenced in clause (a) or (b) of this Section 7.1.1) and such
-------------
default shall continue unremedied for a period of five (5) days after a notice
thereof shall have been given to the Borrower by the Agent or any Lender or a
Responsible Officer of the Borrower shall have actual knowledge thereof.
SECTION 7.1.2 Non-Performance of Certain Covenants. The Borrower
------------------------------------
shall default in the due performance and observance of any of its obligations
under Section 6.1 and such default shall continue unremedied for a period of ten
-----------
(10) days after notice thereof shall have been given to the Borrower by the
Agent (or if such default is not reasonably susceptible to cure within ten (10)
days, such longer period as is reasonably needed to effect such cure, but in no
event longer than thirty (30) days from the date notice is given, so long as the
Borrower promptly commences and diligently pursues such cure), or shall default
in the due performance or observation of any of its obligations under Section
-------
6.2.
- ---
SECTION 7.1.3 Defaults Under Other Loan Documents; Non-Performance of
-------------------------------------------------------
Other Obligations. Any "Event of Default" shall occur under the other Loan
- -----------------
Documents; or the Borrower or any Subsidiary shall default in the due
performance and observance of any other obligation, covenant or agreement
contained herein or in any other Loan Document and such default shall continue
unremedied for a period of ten (10) days after notice thereof shall have been
given to the Borrower by the Agent (or if such default is not reasonably
susceptible to cure within ten (10) days, such longer period as is reasonably
needed to effect such cure, but in no event longer than thirty (30) days from
the date notice is given, so long as the Borrower promptly commences and
diligently pursues such cure).
90
<PAGE>
SECTION 7.1.4 Bankruptcy, Insolvency, etc. The Borrower or any
----------------------------
Subsidiary shall:
(a) become insolvent or generally fail to pay, or admit in writing its
inability to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower or any
Subsidiary or any property of any thereof, or make a general assignment for the
benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver, sequestrator
or other custodian for the Borrower or any Subsidiary or for a substantial part
of the property of any thereof, and such trustee, receiver, sequestrator or
other custodian shall not be discharged within sixty (60) days;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of the Borrower or any Subsidiary, and, if such case or
proceeding is not commenced by the Borrower or such Subsidiary, such case or
proceeding shall be consented to or acquiesced in by Borrower or such Subsidiary
or shall result in the entry of an order for relief or shall remain for sixty
(60) days undismissed; or
(e) take any corporate action authorizing, or in furtherance of, any
of the foregoing.
SECTION 7.1.5 Breach of Warranty. Any representation or warranty of
------------------
the Borrower hereunder or in any other Loan Document or in any other writing
furnished by or on behalf of the Borrower to the Agent or any Lender for the
purposes of or in connection with this Agreement or any such Loan Document is or
shall be incorrect when made in any material respect.
SECTION 7.1.6 Default on Other Indebtedness, etc. (a) Any
-----------------------------------
Indebtedness of the Borrower or any Subsidiary in an aggregate principal amount
exceeding $500,000 (i) shall be duly declared to be or shall become due and
payable prior to the stated maturity thereof (other than as a result of any
mandatory prepayments required under Section 3.3.1 of this Agreement, Section
-------------
4.1 of the Estate Subordinated Note or any provision of any instrument governing
any such Indebtedness that provides for the mandatory prepayment thereof with
insurance proceeds or the like as a result of any casualty loss relating to any
property securing
91
<PAGE>
such Indebtedness), or (ii) shall not be paid as and when the same becomes due
and payable including any applicable grace period; or (b) there shall occur and
be continuing any event under any Instrument relating to any Indebtedness of the
Borrower or any Subsidiary in an aggregate principal amount exceeding $500,000,
the effect of which is to cause such Indebtedness to become due prior to its
stated maturity or to permit the holder or holders of such Indebtedness, or a
trustee, agent or other representative on behalf of such holder or holders, to
cause such Indebtedness to become due prior to its stated maturity or to require
(or permit the holder or holders to require) the Borrower or any Subsidiary to
redeem, repurchase or otherwise acquire or retire such Indebtedness for value.
SECTION 7.1.7 Failure of Valid, Perfected Security Interest. The
---------------------------------------------
security interest or Lien in the Collateral and all proceeds thereof, securing
the Obligations shall cease to be valid or perfected at any time after the
Closing Date (other than as a result of (i) the Agent's failure to make any
required filing to the extent the necessity of such filing was disclosed to the
Agent in an opinion of counsel to the Borrower or (ii) the release of possession
of any pledged Instrument delivered to the Agent or its agent or representative
pursuant to any of the Security Documents).
SECTION 7.1.8 Employee Plans. Any of the following events shall
--------------
occur with respect to any Plan: (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA) not disclosed in Item 8
------
(Benefit Plans) of the Disclosure Schedule, whether or not waived, shall exist
with respect to any Single Employer Plan, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) a notice
of intent to terminate any Single Employer Plan for purposes of Title IV of
ERISA is issued by the plan administrator thereof without the prior written
consent of the Required Lenders, or the PBGC shall commence proceedings to
terminate any Single Employer Plan, (v) the Borrower or any Commonly Controlled
Entity or Subsidiary shall, or in the reasonable opinion of the Required Lenders
is likely to, incur any liability in connection with a withdrawal from, or the
ERISA Insolvency, Plan Reorganization or termination of, a Multiemployer Plan,
(vi) the Borrower or any Commonly Controlled Entity or Subsidiary shall fail to
make any quarterly installment payment to a Pension Plan required under Section
302(e) of ERISA or Section 412(m) of the Code, (vii) the Borrower or any
Commonly Controlled Entity or Subsidiary shall fail to make any contribution to
a Multiemployer Plan which is required under ERISA, the Code or applicable
collective bargaining agreements, or (viii) any
92
<PAGE>
other event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (viii) above, such event or condition, together
with all other such events or conditions, if any, could subject the Borrower or
any Subsidiary (directly or indirectly) to any tax, penalty or other liabilities
under Title I or Title IV of ERISA, Section 404 or 419 and Chapter 43 of the IRC
or any other applicable law which in the aggregate could result in a Material
Adverse Change.
SECTION 7.1.9 Judgments. A final judgment which, with other such
---------
outstanding final judgments against the Borrower and its Subsidiaries (in each
case to the extent not covered by insurance), exceeds an aggregate of $500,000,
shall be entered against the Borrower or any of its Subsidiaries and, within 30
days after entry thereof, such judgment shall not have been discharged or
execution thereof stayed pending appeal, or, within 30 days after the expiration
of any such stay, such judgment shall not have been discharged or stayed.
SECTION 7.1.10 Cessation of Business; Dissolution. The entry of any
----------------------------------
order of a court enjoining, restraining or otherwise preventing the Borrower or
any Subsidiary from conducting all or any material part of its business affairs;
or the cessation of business or dissolution of the Borrower.
SECTION 7.1.11 Subordinated Debt Documents. The Borrower shall fail
----------------------------
to perform, keep or observe any term or provision of, or a default or other
event shall occur or exist under, the Estate Subordinated Note or the Junior
Subordinated Note, or any other event shall have occurred or circumstance shall
exist, in any such case, the effect of which is to accelerate, or to permit the
holder thereof to accelerate, the maturity of the Estate Subordinated Note or
the Junior Subordinated Note or to permit the holder thereof to require the
Borrower to redeem the Estate Subordinated Note or the Junior Subordinated Note
or any portion thereof.
SECTION 7.2 Action if Bankruptcy. If any Event of Default described
--------------------
in clause (d) of Section 7.1.4 shall occur, the outstanding principal amount of
-------------
all outstanding Loans and all other Obligations shall automatically be and
become immediately due and payable and all Commitments shall automatically be
terminated, in either case without notice, demand or presentment.
SECTION 7.3 Action if Other Event of Default. If any Event of
--------------------------------
Default (other than any Event of Default described in clause (d) of Section
-------
7.1.4) shall occur for any reason, whether voluntary or involuntary, and be
- -----
continuing, the Agent may, and upon the direction of the Required Lenders, shall
upon notice or demand, declare all or any portion of the outstanding principal
amount of the Loans to be due and payable and any or all other Obligations to be
due and payable and all Commitments to be terminated, whereupon the full
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unpaid amount of such Loans and any and all other Obligations which shall be so
declared due and payable shall be and become immediately due and payable and any
and all Commitments which shall be so declared terminated shall be and become
immediately terminated, in each case without further notice, demand, or
presentment, and to the extent any obligations are paid by the Borrower, they
shall constitute a prepayment under this Agreement.
ARTICLE 8
THE AGENT
SECTION 8.1 Actions. Each Lender and the holder of each Note
-------
authorize the Agent to act on behalf of such Lender or holder under this
Agreement and any other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time by the Agent
(with respect to which the Agent agrees that it will, subject to the last two
sentences of this Section 8.1, comply, except as otherwise advised by counsel),
-----------
to exercise such powers hereunder and thereunder as are specifically delegated
to or required of the Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Each Lender agrees (which
agreement shall survive any termination of this Agreement) to indemnify the
Agent, pro rata according to such Lender's Percentage, from and against any and
--------
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may at any time be imposed on, incurred by, or asserted against the Agent in any
way relating to or arising out of this Agreement, the Notes, or any other Loan
Document, including the reimbursement of the Agent for all out-of-pocket
expenses (including attorneys' fees) incurred by the Agent hereunder or in
connection herewith or in enforcing the Obligations of the Borrower under this
Agreement or any other Loan Document, in all cases as to which the Agent is not
reimbursed by the Borrower; provided that no Lender shall be liable for the
--------
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
determined by a court of competent jurisdiction in a final proceeding to have
resulted solely from the Agent's gross negligence or wilful misconduct. The
Agent shall not be required to take any action hereunder or under any other Loan
Document, or to prosecute or defend any suit in respect of this Agreement or any
other Loan Document, unless it is indemnified to its satisfaction by the Lenders
against loss, costs, liability and expense. If any indemnity in favor of the
Agent shall become impaired, it may call for additional indemnity and cease to
do the acts indemnified against until such additional indemnity is given.
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SECTION 8.2 Funding Reliance, etc. Unless the Agent shall have been
----------------------
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m., New
York City time, on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such Lender has made such
amount available to the Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount; provided, however, that the
-------- -------
Agent shall have no obligation to do so. If such amount is made available by
such Lender to the Agent on a date after the date of such Borrowing, such Lender
shall pay to the Agent on demand interest on such amount at the Federal Funds
Rate for the number of days from and including the date of such Borrowing to the
date on which such amount becomes immediately available to the Agent, together
with such other compensatory amounts as may be required to be paid by such
Lender to the Agent pursuant to the Rules for Interbank Compensation of the
Council on International Banking or the Clearinghouse Compensation Committee, as
the case may be, as in effect from time to time. A statement of the Agent
submitted to any Lender with respect to any amounts owing under this Section 8.2
-----------
shall be conclusive, in the absence of manifest error. If such amount is not in
fact made available to the Agent by such Lender within three Business Days after
the date of such Borrowing, the Agent shall be entitled to recover such amount,
with interest thereon at the rate per annum then applicable to the Loans
comprising such Borrowing, within five Business Days after demand, from the
Borrower. Nothing herein shall be construed to release any Lender from its
obligation to make Loans subject to the terms and conditions set forth in this
Agreement.
SECTION 8.3 Exculpation. Neither the Agent nor any of its directors,
-----------
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement, the Notes, or any Loan
Document, or in connection herewith or therewith, except for its own wilful
misconduct or gross negligence. The Agent shall not be responsible to any
Lender for any recitals, statements, representations or warranties herein or in
any certificate or other document delivered in connection herewith or for the
authorization, execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, or sufficiency of any of the Loan Documents, the
financial condition of the Borrower or any Subsidiary or the condition or value
of any of the Collateral, or be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
any of the Loan Documents, the financial condition of the Borrower or any
Subsidiary or the existence or possible existence of any Default. The Agent
shall be entitled to rely upon advice of counsel concerning legal matters and
upon any notice, consent, certificate, statement or writing which it believes to
be genuine and to have been presented by a proper Person.
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SECTION 8.4 Successor. The Agent may resign as such at any time upon
---------
at least thirty (30) days' prior notice to the Borrower and all Lenders, such
resignation not to be effective until a successor Agent is in place. If the
Agent at any time shall resign, the Required Lenders may appoint another Lender
as a successor Agent which shall thereupon become the Agent hereunder. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be one of the Lenders or a financial
institution reasonably acceptable to the Borrower organized under the laws of
the United States and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall be entitled to receive from the
retiring Agent such documents of transfer and assignment as such successor Agent
may reasonably request, and shall thereupon succeed to and become vested with
all rights, powers, privileges, and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents.
SECTION 8.5 Loans by the Agent. The Agent shall have the same rights
------------------
and powers with respect to (a) the Loans made by it or any of its Affiliates and
(b) the Notes held by it or any of its Affiliates, as any Lender and may
exercise the same as if it were not the Agent.
SECTION 8.6 Credit Decisions. Each Lender acknowledges that it has,
----------------
independently of the Agent and each other Lender, and based on such financial
information and such other documents, information and investigations as it has
deemed appropriate, made its own credit decision to extend its Commitments, to
make the Loans. Each Lender also acknowledges that it will, independently of
the Agent and each other Lender, and based on such other documents, information
and investigations as it shall deem appropriate at any time, continue to make
its own credit decisions as to exercising or not exercising from time to time
any rights and privileges available to it under this Agreement or any other Loan
Document.
SECTION 8.7 Copies, etc. The Agent shall give prompt notice to each
------------
Lender of each notice or request required or permitted to be given to the Agent
by the Borrower pursuant to the terms of this Agreement. The Agent will
distribute to each Lender each Instrument received for its account and copies of
all other communications received by the Agent from the Borrower for
distribution to the Lenders by the Agent in accordance with the terms of this
Agreement. Notwithstanding anything herein contained to the contrary, all
notices to and communications with the Borrower under this Agreement and the
other Loan Documents shall be effected by the Lenders through the Agent.
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ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Waivers, Amendments, etc. (a) The provisions of this
-------------------------
Agreement and of each Loan Document may from time to time be amended, modified
or waived, if such amendment, modification or waiver is in writing and, (x) in
the case of an amendment or modification, is consented to by the Borrower and
the Required Lenders and (y) in the case of a waiver of any obligation of the
Borrower or compliance with any prohibition contained in this Agreement or any
other Loan Document, is consented to by the Required Lenders; provided, however,
-------- -------
that no such amendment, modification or waiver:
(i) which would modify any requirement hereunder that any particular
action be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(ii) which would modify this Section 9.1, change the definition of
-----------
"Required Lenders," increase the Revolving Loan Commitment Amount or change
any Percentage for any Lender, reduce any fees payable to the Lenders
described in Article 2 and Article 3, extend the Revolving Loan Commitment
--------- ---------
Termination Date or subject any Lender to any additional obligations shall
be made without the consent of each Lender;
(iii) which would extend the due date for, or reduce the amount of,
any payment or prepayment of principal of or interest on any Loan (or
reduce the principal amount of or rate of interest on any Loan) shall be
made without the consent of the holder of the Note evidencing such Loan; or
(iv) which would affect adversely the interests, rights, compensation
or obligations of the Agent qua the Agent shall be made without consent of
---
the Agent.
(b) No failure or delay on the part of the Agent, any Lender or the
holder of any Note in exercising any power or right under this Agreement or any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or consent by the Agent, any Lender,
or the holder of any Note under this Agreement or any other Loan Document shall,
except as may be otherwise stated in such waiver or consent, be applicable to
subsequent transactions. No waiver
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or consent hereunder shall require any similar or dissimilar waiver or consent
thereafter to be granted hereunder.
(c) Neither any Lender nor the Agent shall be under any obligation to
marshal any assets in favor of the Borrower or any other party or against or in
payment of any or all of the Obligations. Recourse for security shall not be
required at any time. To the extent that the Borrower makes a payment or
payments to the Agent or the Lenders, or the Agent or the Lenders enforce their
security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently for any reason invalidated, set aside or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
SECTION 9.2 Notices. All notices hereunder shall be in writing or
-------
by telecopy and shall be sufficiently given to the Agent, the Lenders or the
Borrower if addressed or delivered to them at the following addresses:
If to the Agent: ING Capital
135 East 57th Street
New York, New York 10022
Attention: Chief Credit Officer
Telecopier No.: (212) 750-8935
with copies to: ING Capital
Atlanta Office
200 Galleria Parkway
Suite 950
Atlanta, Georgia 30339
Telecopier No.: (770) 951-1005
and a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Hector E. Llorens, Jr. Esq.
Telecopier No.: (404) 572-5100
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If to any other Lender: At its address set forth beneath its name on the
signature pages hereof
If to the Borrower Brunswick Biomedical Corporation/
prior to the Merger 6 Thacher Lane
Consummation Date: Wareham, Massachusetts 02571
Attention: James H. Miller
Telecopier No.: (508) 460-7702
with a copy to: Palmer & Dodge
One Beacon Street
Boston, Massachusetts 02108
Attention: Stanley Keller, Esq.
Telecopier No: (617) 227-4420
If to the Borrower Survival Technology, Inc.
on or after the Merger 2275 Research Boulevard, Suite 100
Consummation Date: Rockville, Maryland 20850
Attention: James H. Miller
Telecopier No: (301) 926-6423
with a copy to: Palmer & Dodge
One Beacon Street
Boston, Massachusetts 02108
Attention: Stanley Keller, Esq.
Telecopier No: (617) 227-4420
or at such other address as any party may designate to any other party by
written notice. All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; when
received, if deposited in the mail, postage prepaid; when transmission is
verified, if telecopied; and on the next Business Day, if timely delivered to an
air courier guaranteeing overnight delivery.
SECTION 9.3 Costs and Expenses. The Borrower agrees to pay all
------------------
reasonable out-of-pocket expenses of the Agent (including reasonable fees and
expenses of counsel to the Agent, or of any consultants or other experts
retained by the Agent) in connection with (i) the negotiation, preparation,
execution, and delivery of this Agreement and each other Loan Document,
including schedules and exhibits, and any amendments, waivers, consents,
supplements, terminations, releases or other modifications to this Agreement or
any other Loan
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Document as may from time to time hereafter be required, whether or not the
transactions contemplated hereby are consummated, and (ii) the consideration of
legal questions relevant to this Agreement of any other Loan Document. The
Borrower also agrees to pay and hold the Agent and the Lenders harmless from any
stamp, documentary, intangibles, transfer or similar taxes or charges, and all
recording or filing fees with respect to the Loan Documents or any payments to
be made thereunder and any title insurance premiums, surveyors costs and
valuation fees, and to reimburse the Agent and each Lender upon demand for all
reasonable out-of-pocket expenses (including reasonable attorneys' fees and
expenses) incurred by the Agent or such Lender in enforcing the Obligations of
the Borrower or any Subsidiary under this Agreement or any other Loan Document
or related Document or in connection with any restructuring or "work-out" of any
Obligations, provided that the Lenders shall be entitled to reimbursement in
respect of reasonably attorney's fees and expenses payable to a single law firm
(in addition to any law firm representing the Agent) in connection with any such
enforcement, restructuring or "work-out".
SECTION 9.4 Indemnification. In consideration of the execution and
---------------
delivery of this Agreement by the Agent and each Lender, the making of the
Bridge Loan and the Term Loan and the extension of the Revolving Loan
Commitment, the Borrower hereby indemnifies, exonerates and holds the Agent and
each Lender, each of their respective successors and assigns, each of the
respective officers, directors, employees, attorneys and agents of the Agent and
each Lender and each of their respective successors and assigns (collectively,
the "Lender Parties") free and harmless from and against any and all actions,
--------------
causes of action, suits, losses, costs, liabilities (including, but not limited
to, Environmental Liabilities and Costs), damages and expenses (irrespective of
whether such Lender Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(the "Indemnified Liabilities"), incurred by the Lender Parties or any of them
-----------------------
or asserted or awarded against the Lender Parties or any of them as a result of,
or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan, including, without
limitation, the Acquisition and the Merger;
(b) the use of any of the proceeds of the Loans by the Borrower for
any other purpose;
(c) the making of any claim by any investment banking firm, broker or
third party that it is entitled to compensation from the Agent or any Lender in
connection with this
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Agreement (other than investment banking firms and brokers retained by the Agent
or any Lender);
(d) the entering into and performance of this Agreement and any other
Loan Document by any of the Lender Parties (other than the breach by such Lender
Party of this Agreement);
(e) the existence of any contaminant, in, under, on or otherwise
affecting any property owned, used, operated, or leased by Borrower or any
Subsidiary in the past, present, or future or any surrounding areas affected by
such property, regardless of whether the existence of the contaminant is related
to the past, present, or future operations of the Borrower and its Subsidiaries,
or their predecessors in interest or any other Person; any Environmental
Liabilities and Costs related to any property owned, used, operated, or leased
by Borrower or any Subsidiary in the past, present, or future; any Environmental
Liabilities and Costs related to the past, present, or future operations of the
Borrower or any Subsidiaries; any alleged violations of any Environmental Law
related to any property owned, used, operated, or leased by Borrower or any
Subsidiary in the past, present, or future; any alleged violations of any
Environmental Law related to the past, present, or future operations of the
Borrower or any Subsidiaries; the performance of any remedial action that is
related to any property owned, used, operated, or leased by Borrower or any
Subsidiaries in the past, present, or future; the performance of any remedial
action that is related to the past, present, or future operations of the
Borrower or any Subsidiaries; and the imposition of any Lien on any property
affected by this Agreement or any of the other Loan Documents arising from any
Environmental Liabilities or Costs;
(f) the breach in any material respect by Borrower of any
representation or warranty set forth in this Agreement or any Loan Document;
(g) the failure of Borrower to comply in any material respect with any
term, condition, or covenant set forth in this Agreement or any Loan Document;
or
(h) any claim, litigation, investigation or proceeding relating to (i)
any of the Loan Documents, (ii) any proposed acquisition by the Borrower of all
or any portion of the stock or assets of any Person or (iii) any of the other
matters referenced in clauses (a) - (g) above, whether or not the Agent or any
Lender (or any of their respective officers, directors, employees or agents) is
a party thereto;
except for any such Indemnified Liabilities arising for the account of a
- ----------
particular Lender Party by reason of the relevant Lender Party's material breach
of any of its obligations under this Agreement or any other Loan Document or by
reason of the relevant Lender Party's bad faith,
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gross negligence or wilful misconduct, in each such case as determined by a
final and nonappealable decision of a court of competent jurisdiction. If and
to the extent that the foregoing undertaking may be unenforceable for any
reason, the Borrower hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. The foregoing indemnity shall become
effective immediately upon the execution and delivery hereof and shall remain
operative and in full force and effect notwithstanding the consummation of the
transactions contemplated hereunder, the repayment of any of the Loans made
hereunder, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of any Lender or the Agent.
SECTION 9.5 Survival. The obligations of the Borrower under
--------
Sections 2.5, 3.5, 9.3 and 9.4, and the obligations of the Lenders under Section
- ------------ --- --- --- -------
8.1, shall in each case survive any termination of this Agreement. The
- ---
representations and warranties made by the Borrower in this Agreement, the Notes
and in each other Loan Document (including those not required to be made or
repeated after the Merger Consummation Date) shall survive the execution and
delivery of this Agreement, the Notes and each such other Loan Document.
SECTION 9.6 Severability. Any provision of this Agreement, the
------------
Notes or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, the Notes or such other Loan Document or affecting
the validity or enforceability of such provision in any other jurisdiction.
SECTION 9.7 Headings. The various headings of this Agreement, the
--------
Notes and of each other Loan Document are inserted for convenience only and
shall not affect the meaning or interpretation of this Agreement, the Notes or
such other Loan Document or any provisions hereof or thereof.
SECTION 9.8 Counterparts, Effectiveness, etc. This Agreement may
---------------------------------
be executed by the parties hereto in several counterparts, each of which shall
be deemed to be an original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of the Borrower and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent and notice
thereof shall have been given by the Agent to the Borrower and each Lender.
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SECTION 9.9 Governing Law; Entire Agreement. (a) THIS AGREEMENT AND
-------------------------------
THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the Notes and the other
Loan Documents constitute the entire understanding among the parties hereto with
respect to the subject matter hereof and supersede any prior agreements, written
or oral, with respect thereto including the Commitment Letter.
(b) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR RELATED DOCUMENT, AND EACH HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE OR FEDERAL COURT. THE BORROWER AGREES THAT SUCH
JURISDICTION SHALL BE EXCLUSIVE WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING
BROUGHT BY IT AGAINST THE AGENT OR ANY LENDER. EACH PARTY TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE
DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING.
(c) The Borrower hereby irrevocably designates, appoints and empowers
CT Corporation System, whose present address is 1633 Broadway, New York, New
York 10019, as its authorized agent to receive, for and on its behalf and its
property, service of process in the State of New York when and as such legal
actions or proceedings may be brought in the courts of the State of New York or
of the United States of America sitting in New York, and such service of process
shall be deemed complete upon the date of delivery thereof to such agent whether
or not such agent gives notice thereof to the Borrower, or upon the earliest of
any other date permitted by applicable law. The Borrower shall furnish the
consent of CT Corporation System so to act to the Agent on or prior to the
Closing Date. It is understood that a copy of said process served on such agent
will as soon as practicable be forwarded to the Borrower, at its address set
forth below, but its failure to receive such copy shall not affect in any way
the service of said process on said agent as the agent of the Borrower. The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of the
copies thereof by certified mail, return receipt requested, postage prepaid, to
it at its address set forth herein, such service to become effective upon the
earlier of (i) the date 10 calendar days after such mailing or (ii) any earlier
date permitted by applicable law. The Borrower agrees that it will at all times
continuously maintain an agent to receive service of process in the State of New
York on behalf of itself and its properties and in the event that, for any
reason, the agent named above or its successor shall no longer serve as
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its agent to receive service of process in the State of New York on its behalf,
it shall promptly appoint a successor so to serve and shall advise the Agent and
the Lenders thereof (and shall furnish to the Agent the consent of any successor
agent so to act). Nothing in this Section 9.9 shall affect the right of the
-----------
Agent or any Lender to bring proceedings against the Borrower in the courts of
any other jurisdiction or to serve process in any other manner permitted by
applicable law.
SECTION 9.10 Successors and Assigns. This Agreement shall be
----------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that the Borrower may not
-------- -------
assign or transfer its rights or obligations hereunder without the prior written
consent of all Lenders; and the rights of sale, assignment and transfer of the
Lenders are subject to Section 9.11.
------------
SECTION 9.11 Sale and Transfers, Participations, etc. (a) Any
---------------------------------------
Lender may at any time sell to one or more Participants participating interests
in any Loan owing to such Lender, any Note held by such Lender, the Term Loan
Commitment or the Revolving Loan Commitment of such Lender, or any other
interest of such Lender under this Agreement. In the event of any such sale by
a Lender of participating interests to a Participant, such Lender's obligations
under this Agreement shall remain unchanged and such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Note for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. The Borrower
agrees that if amounts outstanding under this Agreement and the Notes are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of setoff in respect of its participating interest in amounts owing
under this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement or any Note, provided that such right of setoff shall be subject to
--------
the approval of the Required Lenders and to the obligations of such Participant
to share with the Lenders, and the Lenders agree to share with such Participant,
as provided in Section 3.8 as if the Participant were a Lender hereunder and the
-----------
Borrower shall have been notified of the name, address, date and amount of such
Participant's participating interest in the Loans and the Commitments. The
Borrower also agrees that each Participant shall be entitled to the benefits of
(i) Section 9.4 and (ii) Sections 2.5 and 3.6, with respect to its participation
----------- ------------ ---
in the Commitments and the Loans outstanding from time to time; provided, that
--------
no Participant shall be entitled to receive any greater amount pursuant to the
Sections referred to in clause (ii) than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
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(b) With the consent of the Agent and the consent of the Borrower
(which consent shall not be unreasonably withheld or delayed), any Lender may at
any time sell to any Purchasing Lender all or any part in a minimum amount of
$2,500,000, of its rights and obligations under this Agreement and the Notes
pursuant to a Transfer Supplement, executed by such Purchasing Lender, such
transferor Lender, the Agent and the Borrower. Upon (i) such execution of such
Transfer Supplement, and (ii) delivery of a fully executed copy thereof to the
Borrower, such Purchasing Lender shall for all purpose be a Lender party to this
Agreement and shall have all the rights and obligations of a Lender under this
Agreement, to the same extent as if it were an original party hereto, with a
Percentage of the Bridge Loan, the Revolving Loan Commitment Amount and the Term
Loan set forth in such Transfer Supplement, and no further consent or action by
the Borrower, the Lenders or the Agent shall be required. Such Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of Percentages arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Notes. Upon the consummation of any
transfer to a Purchasing Lender pursuant to this paragraph (b), the transferor
Lender, the Agent and the Borrower shall make appropriate arrangements so that,
if required, replacement Notes are issued to such transferor Lender and new
Notes to the Purchasing Lender in the amount equal to their respective
Commitments and outstanding Loans, as appropriately adjusted pursuant to such
Transfer Supplement.
(c) The Agent shall maintain at its address referred to herein a copy
of each Transfer Supplement delivered to it and the Register for the recordation
of the names and addresses of the Lenders and the Commitments of, and principal
amount of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as the owner of the Loans recorded therein for all purposes of
this Agreement. The Register shall be available for inspection by the Borrower
or any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of a Transfer Supplement executed by a transferor
Lender, the Agent and a Purchasing Lender together with payment by such
Purchasing Lender to the Agent, for the account of the Agent and not for the
account of the Lenders, of a registration and processing fee of $2,500, and the
Notes subject to such Transfer Supplement, the Agent shall (i) accept such
Transfer Supplement, (ii) record the information therein in the Register and
(iii) give prompt notice of such acceptance and recordation to the Lenders and
the Borrower.
(e) If, pursuant to this Section 9.11, any interest in this Agreement
------------
or any Note is transferred to any Participant or Purchasing Lender which is
organized under the laws
105
<PAGE>
of any jurisdiction other than the United States or any State thereof, the
transferor Lender shall cause such Participant or Purchasing Lender,
concurrently with the effectiveness of such transfer, (i) to represent to the
transferor Lender (for the benefit of the transferor Lender, the Agent and the
Borrower) that under applicable law and treaties no taxes will be required to be
withheld by the Agent, the Borrower or the transferor Lender with respect to any
payments to be made to such Participant or Purchasing Lender in respect of the
Loans or Commitments, (ii) to furnish to the transferor Lender, the Agent and
the Borrower two properly executed original Internal Revenue Service Forms 4224
or 1001 (or any successor forms) and properly executed Internal Revenue Service
Forms W-8 and W-9, as the case may be, (wherein such Participant or Purchasing
Lender claims entitlement to complete exemption from the United States federal
withholding tax on all interest payments hereunder and all fees payable under
Section 2.4) and (iii) to agree (for the benefit of the transferor Lender, the
- -----------
Agent and the Borrower) to provide the transferor Lender, the Agent and the
Borrower new Internal Revenue Service Forms 4224 or 1001 upon the expiration or
obsolescence of any previously delivered form or after the occurrence of any
event requiring a change in the most recent forms delivered by it to the
Transferor Lender, the Agent and the Borrower, and comparable statements in
accordance with applicable United States laws and regulations and amendments
duly executed and completed by such Participant or Purchasing Lender, and to
comply from time to time with all applicable United States laws and regulations
with regard to such withholding tax exemption.
(f) Notwithstanding anything to the contrary set forth in this Section
-------
9.11, (i) any Lender may sell to any of its Affiliates all or any part of its
- ----
rights and obligations under this Agreement and the Notes (provided that no such
Affiliate shall be entitled to receive any greater amount pursuant to Sections
--------
2.5 or 3.6 than that which the transferor Lender would have been entitled to
- --- ---
receive in respect of the amount so assigned by such transferor Lender to such
Affiliate had no such transfer occurred) and, upon the occurrence and during the
continuance of an Event of Default, any Lender may sell to any Purchasing Lender
all or any part of its rights and obligations under this Agreement and the
Notes, in either case notwithstanding that the Borrower has not consented or
does not consent to such sale, provided such Lender has obtained the consent of
the Agent and otherwise meets the requirements of this Section 9.11 and (ii) any
------------
Lender may create a security interest in all or any portion of its rights under
this Agreement (including the Loans owing to it and the notes held by it) in
favor of the Federal Reserve Bank in accordance with Regulation A of the F.R.S.
Board.
SECTION 9.12 Other Transactions. Nothing contained herein shall
------------------
preclude the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
106
<PAGE>
SECTION 9.13 Confidentiality. The Lenders and the Agent shall hold
---------------
all non-public, proprietary or confidential information (which has been
identified as such by the Borrower) obtained pursuant to the requirements of
this Agreement in accordance with their customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices; however, the Lenders and the Agent may make disclosure of any
such information to its examiners, Affiliates, outside auditors, counsel,
consultants, appraisers and other professional advisors in connection with this
Agreement or as required by any proposed syndicate member or any proposed
transferee or participant in connection with the contemplated transfer of any
Note or participation therein or as required or requested by any Governmental
Authority or representative thereof or in connection with the enforcement hereof
or of any Loan Document or related document or pursuant to legal process;
provided, however, that any such proposed syndicate member or proposed
- -------- -------
transferee or participant shall have agreed in writing for the Borrower's
benefit to be bound by the terms of this Section 9.13. In no event shall any
------------
Lender or the Agent be obligated or required to return any materials furnished
to it by the Borrower.
SECTION 9.14 Change in Accounting Principles. If
-------------------------------
(a) any changes in accounting principles from those used in the
preparation of the financial statements referred to in clause (a)(i) of Section
-------
5.4 hereafter occur as a result of the promulgation of rules, regulations,
- ---
pronouncements or opinions by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) result in a change in the method of calculation
of financial covenants, standards or terms found in this Agreement; or
(b) there is any change in the Borrower's Fiscal Year with the
Required Lenders' prior written consent pursuant to Section 6.2.16 hereof;
--------------
the parties hereto agree to enter into negotiations in order to amend such
financial covenants, standards or terms so as to equitably reflect such changes
with the desired result that the evaluations of the Borrower's financial
condition shall be the same after such changes as if such changes had not been
made; provided, however, that, until the parties hereto have reached a
-------- -------
definitive agreement on such amendments the Borrower shall not change its Fiscal
Year (other than a change by Brunswick of its Fiscal Year end to July 31 as a
result of or in contemplation of the Merger) and the Borrower's financial
condition and operations shall continue to be evaluated on the same principles
as those used in the preparation of the financial statements referred to in
clause (a)(i) of Section 5.4.
-----------
107
<PAGE>
SECTION 9.15 Waiver of Jury Trial, Etc. THE AGENT, THE LENDERS AND
--------------------------
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, SUCH LENDERS, OR THE
BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND SUCH
LENDERS ENTERING INTO THIS AGREEMENT.
SECTION 9.16 Limitation of Liability. Neither the Agent, the
-----------------------
Lenders nor any Affiliate thereof shall have any liability with respect to, and
THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON, ANY CLAIM FOR
ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES SUFFERED BY
THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS
AGREEMENT, THE LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED HEREIN, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH.
SECTION 9.17 Usury Savings Clause. Notwithstanding anything to the
--------------------
contrary in this Agreement or any other Loan Document, if at any time any rate
of interest accruing on any Obligation, when aggregated with all amounts
payable by the Borrower or any other Loan Party under any of the Loan Documents
that are deemed or construed to be interest accrued or accruing on such
Obligation under applicable law, exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable to such Lender with respect to such
Obligation (each a "Maximum Lawful Rate"), then in such event and so long as the
-------------------
Maximum Lawful Rate would be so exceeded, such rate of interest shall be reduced
to the Maximum Lawful Rate; provided that if at any time thereafter such rate of
--------
interest accruing on Obligations held by such Lender is less than the Maximum
Lawful Rate, the Borrower shall continue to pay interest to such Lender at the
Maximum Lawful Rate until such time as the total interest received by such
Lender in respect of the Obligations held by it is equal to the total interest
which such Lender would have received had interest on all Obligations held by
such Lender (but for the operation of this Section 9.17) accrued at the rate
------------
otherwise applicable under this Agreement and the other Loan Documents.
Thereafter, interest payable to such Lender in respect of the Obligations held
by it shall accrue at the applicable rate set forth in this Agreement or other
Loan Documents unless and until such rate again exceeds the Maximum Lawful Rate,
in which event this Section 9.17 shall again apply. In no event, shall the
------------
total interest received by any Lender pursuant to the terms hereof exceed the
amount which such Lender could lawfully have received had interest been
calculated
108
<PAGE>
for the full term of this Agreement at the Maximum Lawful Rate. In the event
that the Maximum Lawful Rate is calculated pursuant to this Section 9.17, (a) if
------------
required by applicable law, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made, and (b) if permitted by applicable law, the
Borrower and such Lender shall (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effect thereof, and (iii) amortize, prorate, allocate and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the Loans so that interest for the entire term of
the Loans shall not exceed the Maximum Lawful Rate. In the event that a court
of competent jurisdiction, notwithstanding the provisions of this Section 9.17
------------
shall make a final determination that any Lender has received interest in excess
of the Maximum Lawful Rate, such Lender shall, to the extent permitted by
applicable law, promptly apply such excess, first to any interest due and
outstanding under this Agreement and the other Loan Documents, second to any
principal due and payable under this Agreement and the Notes, third to the
remaining principal amount of the Notes and fourth to other unpaid Obligations
held by such Lender, and thereafter shall refund any excess to the Borrower or
as a court of competent jurisdiction may otherwise order.
SECTION 9.18 Effectiveness of Execution and Delivery by STI. This
----------------------------------------------
Agreement and the other Loan Documents to which Borrower is a party shall be
deemed executed and delivered by STI upon the consummation of the Merger, and
the execution and delivery by STI of this Agreement shall not be a condition to
the execution, delivery and effectiveness of this Agreement as among Brunswick,
the Lenders and the Agent.
109
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their respective officers thereunto duly authorized as
of the day and year first above written.
BRUNSWICK BIOMEDICAL CORPORATION
By:/s/ James H. Miller
---------------------------------------
James H. Miller
President
Percentage
- ----------
100% - Bridge INTERNATIONALE NEDERLANDEN (U.S.)
100% - Revolving CAPITAL CORPORATION, as Agent and as
100% - Term Lender
By:/s/ Darren Wells
--------------------------------------------
Darren Wells
Managing Director
110
<PAGE>
EXHIBITS OMITTED AS NON-MATERIAL
111
<PAGE>
EXHIBIT 3(B)
BRIDGE NOTE
-----------
$11,000,000.00 April 15, 1996
FOR VALUE RECEIVED, the undersigned, BRUNSWICK BIOMEDICAL CORPORATION, a
Massachusetts corporation (the "Borrower"), promises to pay to the order of
--------
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, a Delaware corporation
(the "Lender"), at the times provided in the Credit Agreement referenced
------
hereinafter, the principal sum of ELEVEN MILLION AND NO/100 DOLLARS
($11,000,000.00) or, if less, the outstanding principal amount of the Bridge
Loan made by the Lender pursuant to that certain Credit Agreement, dated as of
April 15, 1996 (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement"; capitalized terms used herein and not
----------------
defined herein shall have the meaning ascribed to them in the Credit Agreement),
among the Borrower, Internationale Nederlanden (U.S.) Capital Corporation, as
Agent, and the various lenders (including the Lender) as are, or may from time
to time become, parties thereto. Notations indicating the Bridge Loan made by
the Lender pursuant to the Credit Agreement and all payments on account of the
principal thereof may be endorsed by the holder hereof on the grid Schedule
attached to this Note, as provided in the Credit Agreement.
The unpaid principal amount of this Note from time to time shall bear
interest as provided in Section 3.4 of the Credit Agreement. All payments of
principal of and interest on this Note shall be payable in lawful currency of
the United States of America to the account designated by the Agent (and as to
which the Agent has notified the Borrower) in immediately available funds in
accordance with Section 3.6 of the Credit Agreement.
This Note is a Bridge Note referenced in, and evidences Indebtedness
incurred under, the Credit Agreement, to which reference is made for a
description of the security for this Note and for a statement of the terms and
conditions on which the Borrower is permitted and required to make prepayments
and repayments of principal of the Indebtedness evidenced by this Note and on
which such Indebtedness may be declared to be or may automatically become
immediately due and payable.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
<PAGE>
The Borrower hereby waives all requirements as to diligence, presentment,
demand of payment, protest and notice of any kind with respect to this Note. All
amounts owing hereunder are payable by the Borrower without relief from any
valuation or appraisal laws.
Executed under seal as of the day and year first above written.
BRUNSWICK BIOMEDICAL CORPORATION
By: /s/ James H. Miller
---------------------
James H. Miller
President
-2-
<PAGE>
Schedule of Bridge Loan and Repayments
<TABLE>
<CAPTION>
Person
Amount of Amount of Outstanding Making
Date Bridge Loan Repayment Balance Notation
- ---- ----------- --------- ----------- --------
<S> <C> <C> <C> <C>
4/15/96 $11,000,000.00 $11,000,000.00
</TABLE>
-3-
<PAGE>
EXHIBIT 3(C)
STOCK AND NOTES PLEDGE AGREEMENT
--------------------------------
THIS STOCK AND NOTES PLEDGE AGREEMENT (this "Agreement"), dated as of
---------
April 15, 1996, between BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts
corporation (the "Borrower"), and INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
--------
CORPORATION, a Delaware corporation ("ING"), as Agent (in such capacity, the
---
"Agent") for itself and the other lenders (ING and such other lenders,
- ------
collectively, the "Lenders") as are, or may from time to time become, parties to
-------
the Credit Agreement (as defined below).
W I T N E S S E T H:
-------------------
RECITALS.
A. Pursuant to a Stock Purchase Agreement, dated as of March 18, 1996,
between the Borrower and the Estate of Dr. Stanley J. Sarnoff (the "Estate"),
------
the Borrower has agreed to acquire 1,888,126 shares (the "STI Shares") of Common
----------
Stock, $0.10 par value, of Survival Technology, Inc., a Delaware corporation
("STI");
---
B. The Borrower, the Lenders and the Agent have entered into a Credit
Agreement, dated as of even date herewith (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), pursuant to which the
----------------
Lenders have agreed to make available Loans to the Borrower, as more
specifically set forth in the Credit Agreement;
C. The initial Loans are to be used by the Borrower to finance in part
the purchase of the STI Shares; and
D. The Borrower is the holder of shares of capital stock of its
Subsidiaries and is the holder of certain other instruments and securities.
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged by it, and in order to induce the Lenders to make Loans to
the Borrower pursuant to the Credit Agreement, the Borrower agrees with the
Agent, for its benefit and the ratable benefit of the Lenders, as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
-------------
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
<PAGE>
"Collateral" means, collectively, (a) the Pledged Shares; (b) the
----------
Pledged Notes; (c) all other Pledged Property, whether now or hereafter
delivered to the Agent in connection with this Agreement; and (d) all proceeds
of any of the foregoing.
"Default" means any Event of Default or any condition or event which,
-------
after notice or lapse of time or both, would constitute an Event of Default.
"Distributions" mean all stock dividends, liquidating dividends,
-------------
shares of stock resulting from stock splits, reclassifications, warrants,
options, non-cash dividends and other distributions (whether similar or
dissimilar to the foregoing) on or with respect to any Pledged Shares or other
shares of capital stock constituting Collateral, but shall not mean Dividends.
"Dividends" means cash dividends and cash distributions with respect
---------
to any Pledged Shares made out of capital surplus.
"Event of Default" means any event described in Section 5.1.
---------------- -----------
"Initial Pledged Shares" means the capital stock more particularly
----------------------
described in Attachment 1 hereto as of the Closing Date.
------------
"Initial Pledged Notes" means the promissory notes more particularly
---------------------
described in Attachment 2 hereto as of the Closing Date.
------------
"Pledged Notes" means the Initial Pledged Notes and all other
-------------
promissory notes now or hereafter delivered by the Borrower to the Agent as
Pledged Property hereunder and more particularly described on Attachment 1
------------
hereto, as amended and supplemented from time to time.
"Pledged Property" means (a) all Pledged Shares and all Dividends,
----------------
Distributions, securities, cash, instruments, interest payments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Shares,
and (b) the Pledged Notes and the instruments evidencing the Pledged Notes, and
all interest, cash, instruments or other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Pledged Notes.
"Pledged Shares" means the Initial Pledged Shares and all other
--------------
capital stock now or hereafter delivered by the Borrower to the Agent as Pledged
Property hereunder and more particularly described in Attachment 2 hereto, as
------------
amended and supplemented from time to time.
"ratable" or "ratably" means, in the context of a distribution of
------- -------
Collateral or a distribution of proceeds of any of the Collateral, an allocation
of such Collateral or proceeds among the Lenders pro rata in accordance with
--------
their respective portion of the aggregate dollar amount of the Secured
Obligations to which the distribution is being applied.
-2-
<PAGE>
"Secured Obligations" means, collectively, the obligations of the
-------------------
Borrower under the Credit Agreement and the other Loan Documents, including,
without limitation, its "Obligations" (as that term is defined in the Credit
Agreement).
"STI Shares" is defined in Recital A.
---------- ---------
"U.C.C." means the Uniform Commercial Code as in effect on the date
------
hereof in the State of New York; provided that if by reason of mandatory
--------
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York, "UCC" means
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or effect of perfection or
non-perfection.
SECTION 1.2. Credit Agreement Definitions, Cross-References, etc.
----------------------------------------------------
Capitalized terms used herein (including the preamble and recitals hereof) shall
have the meanings assigned to them in the Credit Agreement, unless the context
otherwise requires or unless otherwise defined herein. References in this
Agreement, the Credit Agreement or any other Loan Document to this "Agreement"
or the "Pledge Agreement" shall mean this Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the
foregoing, and shall refer to this Agreement as the same may be in effect at the
time such reference becomes operative. References in this Agreement to any
Section, unless otherwise specified, are references to such Section of this
Agreement, and references in such Section to any subsection or clause, unless
otherwise specified, are references to such subsection or clause of such
Section.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or
------------------
the context otherwise requires, terms for which meanings are provided in the
U.C.C. are used in this Agreement, including its preamble and recitals, with
such meanings.
ARTICLE 2
PLEDGE
SECTION 2.1. Grant of Security Interest. The Borrower hereby
--------------------------
pledges, assigns, charges, mortgages, delivers, sets over, conveys and transfers
to the Agent, for its benefit and the ratable benefit of the Lenders, and hereby
grants to the Agent, for its benefit and the ratable benefit of the Lenders, a
continuing security interest in and to, all of the Collateral.
SECTION 2.2. Security for Secured Obligations. This Agreement and
--------------------------------
the Collateral secure the payment in full and performance of all Secured
Obligations.
SECTION 2.3. Delivery of Pledged Property; Registration of Pledge,
-----------------------------------------------------
Transfer, etc. All certificates and instruments representing or evidencing any
- -------------
Collateral, including all Pledged Shares and Pledged Notes, shall be delivered
to and held by or on behalf
-3-
<PAGE>
of the Agent pursuant to this Agreement, shall be in suitable form for transfer
by delivery, and shall be accompanied by all necessary instruments of transfer
or assignment, duly executed in blank and, if the Agent shall so request, with
signatures guaranteed by a member of a registered national securities exchange
or the National Association of Securities Dealers, Inc. or by a commercial bank
or trust company having an office or correspondent in the United States. The
Agent shall have the right, at any time without notice to the Borrower, to
transfer to, or to register in the name of, the Agent or any of its nominees,
any or all of the Pledged Shares and any or all of the Pledged Notes, subject
only to the revocable rights of the Borrower specified in Section 4.6. In
-----------
addition, the Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing any Pledged Shares or Pledged Notes for
certificates or instruments of smaller or larger denominations.
SECTION 2.4. Dividends on Pledged Shares. In the event that any
---------------------------
Dividend is to be paid on any Pledged Share at a time when no Default or Event
of Default has occurred and is continuing or would result therefrom and such
Dividend is otherwise permitted by the Credit Agreement, such Dividend may be
paid directly to the Borrower.
SECTION 2.5. No Duty to Agent. The powers conferred on the Agent
----------------
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Beyond reasonable care in
the custody of any Collateral in its possession and the accounting for moneys
actually received by it under this Agreement, the Agent shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Agent shall be deemed to have exercised reasonable care in the custody of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property, and the Agent
shall not be liable or responsible for any loss or damage to any of the
Collateral, or from any diminution in the value of any Collateral, by reason of
the act or omission of any carrier, forwarding agency, or other agent selected
by the Agent in good faith.
SECTION 2.6. Continuing Security Interest; Transfer of Secured
-------------------------------------------------
Obligation. This Agreement shall:
- ----------
(a) create a continuing security interest in the Collateral;
(b) remain in full force and effect until the earlier of (i) the payment
in full and performance of all Secured Obligations or (ii) the consummation of
the Merger;
(c) be binding upon the Borrower, its administrators, successors and
assigns, provided, however, that the Borrower may not assign any of its rights
-------- --------
or obligations hereunder without the prior written consent of the Agent; and
(d) inure to the benefit of the Agent and the Lenders and their respective
successors, transferees and assigns.
-4-
<PAGE>
Without limitation to the foregoing, any Lender may assign or otherwise transfer
any Note, Loan or other Secured Obligation held by it to any other Person, in
accordance with the terms of the Credit Agreement, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted herein
or otherwise.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Warranties, Etc. The Borrower represents and warrants
---------------
as follows:
(a) The Borrower is and at all times will be the legal and beneficial
owner of, and has and at all times will have good and marketable title to (and
has and at all times will have full right and authority to pledge and assign),
all Collateral, free and clear of all Liens or other charges or encumbrances,
except the Lien granted pursuant to this Agreement in favor of the Agent and the
Lien granted to the Estate in the Initial Pledged Shares to the extent such Lien
is subordinated to the Lien in favor of the Agent in the Initial Pledged Shares.
(b) The delivery of the Collateral to the Agent is effective to
create a valid, perfected, first priority security interest in such Collateral
and all proceeds thereof, securing the Secured Obligations, and no filing or
other action is necessary to perfect or protect such security interest, except
that the filing of a financing statement, the taking of possession or some other
action may be required under Section 9-306 of the U.C.C. to perfect a security
interest in certain proceeds of the Collateral that does not constitute Pledged
Notes, Pledged Shares or other securities or instruments.
(c) The Pledged Shares have been duly authorized and validly issued,
and are fully paid, and nonassessable.
(d) The Pledged Shares constitute that percentage of all of the
issued and outstanding shares of Stock of the issuer set forth opposite such
Pledged Shares on Attachment 2 hereto
------------
(e) The Pledged Notes evidence the amount of outstanding
indebtedness for money borrowed of the respective obligors thereof indicated on
Attachment 1 hereto
- ------------
(f) No authorization, approval, or other action by, and no notice to
or filing with, any Governmental Authority is or will be required either:
(i) for the pledge by the Borrower of any Collateral pursuant to
this Agreement or for the execution, delivery, or performance of this
Agreement by the Borrower, or
(ii) for the exercise by the Agent of the voting or other rights
provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement
-5-
<PAGE>
(except, with respect to any Pledged Shares or Pledged Notes, as may
be required in connection with a disposition of such Pledged Shares or
Pledged Notes by laws affecting the offering and sale of securities
generally).
SECTION 3.2. Warranties upon Pledge of Additional Collateral. The
-----------------------------------------------
Borrower shall be deemed to restate each representation and warranty set forth
in Section 3.1 as at the date of each pledge hereunder by the Borrower to the
-----------
Agent of any Collateral.
ARTICLE 4
COVENANTS
SECTION 4.1. Protect Collateral; Further Assurances, Etc. The
-------------------------------------------
Borrower will not sell, assign, transfer, pledge or encumber in any other manner
the Collateral (except in favor of the Agent hereunder or with respect to the
Lien in favor of the Estate on the Initial Pledged Shares). The Borrower will
warrant and defend the right, title and security interest herein granted to the
Agent in and to the Collateral (and all right, title and interest represented by
the Collateral) against the claims and demands of all Persons whomsoever. The
Borrower agrees that at any time, and from time to time, at the expense of the
Borrower, the Borrower will promptly execute and deliver all further
Instruments, and take all further action, that may be necessary, or that the
Agent may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
SECTION 4.2. Issuance of Stock, Etc. The Borrower will not,
----------------------
subsequent to the date of this Agreement, without the prior written consent of
the Required Lenders, cause or permit any Subsidiary to issue or grant any
warrants, stock options of any nature or other instruments convertible into
shares of any class of Stock or issue any additional shares of Stock or sell or
transfer any treasury Stock; provided, however, that STI may issue additional
-------- -------
shares of Stock in connection with the exercise of any stock options existing as
of the date hereof which have been issued under STI employee stock option plans
or upon the exercise of warrants for Stock existing on the Closing Date.
SECTION 4.3. Taxes. The Borrower will pay all taxes, assessments
-----
and charges levied, assessed or imposed upon the Collateral before the same
become delinquent or become Liens upon any of the Collateral except where the
same may be contested in good faith by appropriate proceedings and as to which
adequate reserves have been provided.
SECTION 4.4. Stock Powers, Etc. The Borrower agrees that all
-----------------
Pledged Shares (and all other shares of Stock constituting Collateral) delivered
by the Borrower pursuant to this Agreement will be accompanied by all necessary
instruments of transfer or assignment, duly executed in blank and, if the Agent
shall so request, with signatures guaranteed by a member of a national
securities exchange or the National Association of Securities Dealers, Inc. or
by a commercial bank or trust company having an office or correspondent in the
United States. The Borrower will, from time to time upon the request of the
Agent, promptly deliver
-6-
<PAGE>
to the Agent such stock powers, instruments and similar documents, satisfactory
in form and substance to the Agent, with respect to the Collateral as the Agent
may reasonably request and will, from time to time upon the request of the Agent
after the occurrence of any Event of Default, promptly transfer any Pledged
Shares or other shares of Stock constituting Collateral into the name of the
Agent or any nominee designated by the Agent.
SECTION 4.5. Continuous Pledge. Subject to Section 2.4, the
----------------- -----------
Borrower will, at all times, keep pledged to the Agent pursuant hereto all
Pledged Shares, all Dividends and Distributions with respect thereto, all
Pledged Notes and all other Collateral.
SECTION 4.6. Voting Rights; Dividends, Etc. The Borrower agrees to
-----------------------------
deliver all Distributions at any time received by it to the Agent to be held as
Collateral hereunder. The Borrower shall be entitled to (i) exercise, in its
reasonable judgment, but in a manner not inconsistent with the terms of the
Credit Agreement or any other Loan Document (including this Agreement), the
voting powers and all other incidental rights of ownership with respect to any
Pledged Shares (subject to the Borrower's obligation to deliver to the Agent
such Pledged Shares, and (ii) receive all Dividends in accordance with Section
-------
2.4 to the extent such Dividends were permitted to be paid pursuant to the
- ---
Credit Agreement; provided, however, that
-------- -------
(a) if any Event of Default shall have occurred and be continuing or
if any Event of Default shall occur as a result thereof, promptly upon receipt
thereof by the Borrower and without any request therefor by the Agent, the
Borrower shall deliver (properly endorsed where required hereby or requested by
the Agent) to the Agent all Dividends, all of which shall be held by the Agent
as additional Collateral for use in accordance with Section 5.5;
-----------
(b) if any Event of Default shall have occurred and be continuing,
all rights of the Borrower to exercise or refrain from exercising voting or
other consensual rights in respect of the Collateral shall cease and all such
rights shall thereupon become vested in the Agent who shall thereupon have the
sole right to exercise or refrain from exercising such voting and other
consensual rights; and
(c) if any Event of Default shall have occurred and be continuing,
promptly upon request of the Agent, the Borrower shall deliver to the Agent such
proxies and other documents as may be necessary to allow the Agent to exercise
the voting and other consensual rights with respect to any Collateral.
All Dividends, Distributions, cash payments and proceeds which the Borrower is
then obligated to deliver to the Agent, shall, until delivery to the Agent, be
held by the Borrower separate and apart from its other property in trust for the
Agent. The Agent agrees that unless an Event of Default shall have occurred and
be continuing, the Agent shall, upon the written request of the Borrower,
promptly deliver such proxies and other documents, if any, as shall be
reasonably requested by the Borrower which are necessary to allow the Borrower
to exercise voting power with respect to any share of Stock (including Pledged
Shares) constituting Collateral; provided, however, that no vote shall be cast,
-------- -------
or consent, waiver or ratification given, or action taken by the Borrower that
would impair in any material respect any Collateral or be inconsistent with
-7-
<PAGE>
or violate any provision of the Credit Agreement or any other Loan Document
(including this Agreement).
SECTION 4.7. Additional Information. The Borrower will furnish to
----------------------
the Agent and the Lenders written notice of the occurrence of any event which
would make any representation contained in Article 3 untrue at such time.
---------
SECTION 4.8. Additional Pledged Collateral. In the event that the
-----------------------------
Borrower is required, under the terms of the Credit Agreement, the terms of any
other Loan Document or otherwise, to pledge any Collateral after the Closing
Date, the Borrower shall pledge such Collateral, and be bound with respect to
such Collateral by all of the terms and conditions hereof, by delivery to the
Agent of such Collateral together with an executed counterpart of a Supplement
to Pledge Agreement in the form of Exhibit A attached hereto.
---------
ARTICLE 5
EVENTS OF DEFAULT; REMEDIES
SECTION 5.1. Events of Default. Each of the following shall
-----------------
constitute an "Event of Default" hereunder:
(a) if there shall occur any Event of Default under the Credit
Agreement;
(b) if any of the Collateral shall be attached or levied upon or
seized in any legal proceeding, or held by virtue of any Lien or distress, other
than Liens permitted under Section 6.2.3 of the Credit Agreement; or
(c) if any representation or warranty of the Borrower set forth
herein or in the Credit Agreement shall be untrue in any material respect or if
the Borrower shall default in the due performance and observance of any covenant
contained herein and such default shall continue unremedied for a period of ten
(10) days after notice thereof shall have been given to the Borrower by the
Agent.
SECTION 5.2. Actions upon Event of Default. In addition to its
-----------------------------
rights and remedies provided hereunder, whenever an Event of Default shall have
occurred and be continuing, the Agent shall have all rights and remedies of a
secured party upon default under the U.C.C. or other applicable law. Any
notification required by law of any intended disposition by the Agent of any of
the Collateral shall be deemed reasonably and properly given if given at least
ten (10) days before such disposition. Without limitation of the above, the
Agent may or, upon direction of the Required Lenders, shall whenever an Event of
Default shall have occurred and be continuing, without prior notice to the
Borrower, take all or any of the following actions:
(a) transfer all or any part of the Collateral into the name of the
Agent or its nominee, without disclosing that such Collateral is subject to the
Lien hereunder;
-8-
<PAGE>
(b) notify the obligors on any of the Collateral to make payment to
the Agent of any amount due or to become due thereunder;
(c) enforce collection of any of the Collateral by suit or otherwise,
and surrender, release or exchange all or any part thereof, or compromise or
extend or renew for any period (whether or not longer than the original period)
any obligations of any nature of any party with respect thereto;
(d) endorse any checks, drafts or other writings in the Borrower's
name to allow collection of the Collateral;
(e) take control of any proceeds of the Collateral; and
(f) execute (in the name, place and stead of the Borrower)
endorsements, assignments, stock powers and other instruments of conveyance or
transfer with respect to all or any of the Collateral.
SECTION 5.3. Attorney-in-Fact. The Borrower hereby irrevocably
----------------
appoints the Agent its true and lawful attorney, with full power of
substitution, in the name of the Borrower, the Agent, the Lenders or otherwise,
for the sole use and benefit of the Agent and the Lenders, but at the Borrower's
expense, upon the occurrence and during the continuation of an Event of Default
to take any action and to execute any instrument which the Agent may deem
necessary or advisable to accomplish the purposes of this Agreement.
SECTION 5.4. Private Sales. (a) The Borrower recognizes that the Agent
-------------
may be unable, after the occurrence and during the continuance of any Event of
Default, to effect a public sale of any or all the Pledged Shares by reason of
certain prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act") and applicable state securities law or otherwise, and may be
--------------
compelled to resort to one or more private sales thereof to a restricted group
of purchasers that will be obligated to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. The Borrower acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Agent shall be under no obligation to delay sale of any
of the Pledged Shares for the period of time necessary to permit any Subsidiary
to register such securities for public sale under the Securities Act, or under
applicable state securities law, even if such Subsidiary would agree to do so.
(b) The Borrower further agrees to use its best efforts, after the
occurrence and during the continuance of an Event of Default, to do or cause to
be done all such acts as may be necessary to make such sale or sales of all or
any portion of the Pledged Shares pursuant to this Section 5.4 valid and binding
-----------
and in compliance with any and all other applicable Requirements of Law.
-9-
<PAGE>
SECTION 5.5. Application of Proceeds. All cash proceeds received by
-----------------------
the Agent in respect of any sale of, collection from, or other realization upon,
all or any part of the Collateral may, in the discretion of the Agent, be held
by the Agent as additional collateral security for, or then or at any time
thereafter be applied (after payment of any amounts payable to the Agent
pursuant to Section 9.3 of the Credit Agreement and Sec tion 5.6 of this
Agreement) in whole or in part by the Agent against, all or any part of the
Secured Obligations in the following order:
(a) first, ratably, to the unpaid interest (including post-petition
-----
interest) accrued and then due or owing on the Secured Obligations and to the
aggregate amount of fees described in Section 2.4 of the Credit Agreement which
-----------
have accrued and are unpaid;
(b) second, ratably, among holders of the Notes, on account of all
------
principal of any Secured Obligations then due or owing; and
(c) third, to any other Secured Obligations then due or owing.
-----
After termination of the Commitments, any surplus of such cash or cash proceeds
held by the Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive such surplus.
SECTION 5.6. Indemnity and Expenses. The Borrower hereby
----------------------
indemnifies and holds harmless the Agent and the Lenders from and against any
and all claims, losses and liabilities growing out of or resulting from this
Agreement (including enforcement of this Agreement), except claims, losses, or
liabilities resulting from the Agent's gross negligence or willful misconduct.
Upon demand, the Borrower will pay, or cause to be paid, to the Agent the amount
of any and all expenses, including the fees and disbursements of its counsel and
of any experts and agents, which the Agent may incur in connection with:
(a) the administration of this Agreement;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the Agent
hereunder and any action taken by the Agent under Section 6.4; and
-----------
(d) the failure by the Borrower to perform or observe any of the
provisions hereof.
SECTION 5.7. Registration Rights. If the Agent shall determine to
-------------------
exercise its right to sell any of the Pledged Shares pursuant to Section 5.2
-----------
or under applicable law, the Borrower agrees that, upon request of
the Agent, as soon as practicable, the Borrower will, at its own expense:
-10-
<PAGE>
(a) execute and deliver, and cause each issuer of the Pledged Shares
that is a Subsidiary of the Borrower and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of
the Agent, advisable to register such Pledged Shares under the provisions of the
Securities Act, and to cause the registration statement relating thereto to
become effective and remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectuses which, in the opinion of the Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Shares under the
state securities or "Blue Sky" laws and to obtain all necessary governmental
approval for the sale of the Pledged Shares, as requested by the Agent;
(c) cause each issuer of the Pledged Shares that is a Subsidiary of
the Borrower to make available to its security holders, as soon as practicable,
an earnings statement which will satisfy the provisions of Section 14(a) of the
Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Shares or any part thereof valid and
binding and in compliance with applicable law.
The Borrower further acknowledges the impossibility of ascertaining the amount
of damages which would be suffered by the Agent and the Lenders by reason of the
failure of the Borrower to perform any of the covenants contained in this
Section and, consequently, agrees that the remedy of specific performance may be
granted to require the Borrower to comply with the covenants contained in this
Section, at any time after the Agent shall demand compliance with this Section.
ARTICLE 6
MISCELLANEOUS
SECTION 6.1. Loan Document. This Agreement is a Loan Document
-------------
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof, including Article 9 thereof.
SECTION 6.2. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement nor consent to any departures by the Borrower
herefrom shall in any event be effective unless the same shall be in writing,
signed by the Agent (with the consent of the Required Lenders), and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it is given.
-11-
<PAGE>
SECTION 6.3. Obligations Not Affected. The obligations of the
------------------------
Borrower under this Agreement shall remain in full force and effect without
regard to, and shall not be impaired or affected by:
(a) any amendment or modification or addition or supplement to the
Credit Agreement, any Note, any other Loan Document, any Instrument delivered in
connection therewith or any assignment or transfer thereof;
(b) any exercise, non-exercise or waiver by the Agent or any Lender
of any right, remedy, power or privilege under or in respect of, or any release
of any guaranty or collateral provided pursuant to, this Agreement, the Credit
Agreement or any other Loan Document;
(c) any waiver, consent, extension, indulgence or other action or
inaction in respect of this Agreement, the Credit Agreement or any other Loan
Document or any assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like, of the Borrower or any other
Person, whether or not the Borrower shall have notice or knowledge of any of the
foregoing.
SECTION 6.4. Protection of Collateral. The Agent may from time to
------------------------
time, at its option, perform any act which the Borrower agrees hereunder to
perform and which the Borrower shall fail to perform after being requested in
writing to so perform (it being understood that no such request need be given
after the occurrence and during the continuance of an Event of Default) and the
Agent may from time to time take any other action which the Agent reasonably
deems necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.
SECTION 6.5. Addresses for Notices. All notices and other
---------------------
communications provided for hereunder to any party hereto shall be given in the
manner provided in Section 9.2 of the Credit Agreement.
SECTION 6.6. Governing Law; Jurisdiction. (a) THIS AGREEMENT SHALL
---------------------------
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT PERFECTION (AND THE EFFECT OF
PERFECTION AND NONPERFECTION) AND CERTAIN REMEDIES MAY BE GOVERNED BY THE LAWS
OF ANY JURISDICTION OTHER THAN NEW YORK.
(b) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT (AND THE BORROWER AGREES THAT SUCH JURISDICTION WILL BE EXCLUSIVE
WITH RESPECT TO CLAIMS BROUGHT BY THE BORROWER AGAINST THE AGENT OR ANY
-12-
<PAGE>
LENDER), AND EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR
FEDERAL COURT. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF ANY INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(c) The Borrower hereby irrevocably designates, appoints and empowers
CT Corporation System, whose present address is 1633 Broadway, New York, New
York 10019, as its authorized agent to receive, for and on its behalf and on
behalf of its property, service of process in the State of New York when and as
such legal actions or proceedings may be brought in the courts of the State of
New York or of the United States of America sitting in the Southern District of
New York, and such service of process shall be deemed complete upon the date of
delivery thereof to such agent whether or not such agent gives notice thereof to
the Borrower, or upon the earliest of any other date permitted by applicable
law. It is understood that a copy of said process served on such agent will as
soon as practicable be forwarded to the Borrower, at the address set forth
below, but the Borrower's failure to receive such copy shall not affect in any
way the service of said process on said agent as the agent of the Borrower. The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of the
copies thereof by certified mail, return receipt requested, postage prepaid, to
the Borrower at its address set forth below, such service to become effective
upon the earlier of (i) the date 10 calendar days after such mailing or (ii) any
earlier date permitted by applicable law. The Borrower agrees that it will at
all times continuously maintain an agent to receive service of process in the
State of New York on behalf of the Borrower and its properties and in the event
that, for any reason, the agent named above or its successor shall no longer
serve as its agent to receive service of process in the State of New York on its
behalf, it shall promptly appoint a successor so to serve and shall advise the
Agent and the Lenders thereof (and shall furnish to the Agent the consent of any
successor agent so to act). Nothing in this Section 6.6 shall affect the right
-----------
of the Agent or any Lender to bring proceedings against the Borrower in the
courts of any other jurisdiction or to serve process in any other manner
permitted by applicable law.
SECTION 6.7. Waiver of Jury Trial, Etc. THE AGENT, THE LENDERS AND
-------------------------
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, SUCH LENDERS, OR THE BORROWER.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND SUCH LENDERS ENTERING
INTO THE CREDIT AGREEMENT.
SECTION 6.8. Limitation of Liability. Neither the Agent, the
-----------------------
Lenders nor any Affiliate thereof, shall have any liability with respect to, and
THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON, ANY CLAIM FOR
ANY
-13-
<PAGE>
SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES SUFFERED BY
THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREIN OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION HEREWITH.
SECTION 6.9. Counterparts, Effectiveness, etc. This Agreement may
---------------------------------
be executed by the parties hereto in several counterparts, each of which shall
be deemed to be an original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of the Borrower and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent and notice
thereof shall have been given by the Agent to the Borrower and each Lender.
SECTION 6.10. Termination. Upon the earlier of (i) the payment in
-----------
full and performance of all Secured Obligations or (ii) the consummation of the
Merger, the security interest granted herein shall terminate and all rights to
the Collateral shall revert to the Borrower. Upon any such termination the
Agent will, at the Borrower's expense, deliver all certificates and instruments
representing or evidencing all Pledged Shares and the Pledged Notes, together
with all other Collateral held by the Agent under this Agreement, and execute
and deliver to the Borrower, at the Borrower's expense, such documents as the
Borrower shall reasonably request to evidence such termination.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal as of the date first above written.
BRUNSWICK BIOMEDICAL CORPORATION
By: /s/ James H. Miller
----------------------
James H. Miller
President
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
CORPORATION, as Agent
By: /s/ Darren Wells
----------------------
Darren Wells
Managing Director
-14-
<PAGE>
ATTACHMENT 1
(to the Stock and Notes
Pledge Agreement)
PLEDGED NOTES
-------------
<TABLE>
<CAPTION>
Issuer/ Date of Face Outstanding
Maker Instrument Amount Principal Amount
----- ---------- ------ ----------------
<S> <C> <C> <C>
Brunswick 4/15/96 $600,000.00 $550,000.00
Biomedical
Technologies,
Inc.
</TABLE>
-15-
<PAGE>
ATTACHMENT 2
(to the Stock and Notes
Pledge Agreement)
PLEDGED SHARES
--------------
<TABLE>
<CAPTION>
Class of Number of Certificate Percentage
Issuer Capital Stock Shares Number(s) of Outstanding
------ ------------- ----------- ------------- --------------
<S> <C> <C> <C> <C>
Survival
Technology, Common 1,888,126 Listed on 61.14% attached
Exhibit A-1
Brunswick Common 90,000 1 90%
Biomedical
Technologies,
Inc.
</TABLE>
-16-
<PAGE>
EXHIBIT A
---------
to
Stock and Notes Pledge Agreement
--------------------------------
SUPPLEMENT TO PLEDGE AGREEMENT
------------------------------
THIS SUPPLEMENT TO PLEDGE AGREEMENT (this "Supplement"), dated as of
----------
_____________ __, 19___, is executed by BRUNSWICK BIOMEDICAL CORPORATION, a
Massachusetts corporation (the "Borrower"), in favor of INTERNATIONALE
--------
NEDERLANDEN (U.S.) CAPITAL CORPORATION, a Delaware corporation ("ING"), as Agent
---
(in such capacity, the "Agent") for itself and the other lenders (ING and such
-----
other lenders, collectively, the "Lenders") as are, or may from time to time
-------
become, parties to the Credit Agreement (as defined below). Terms used herein
but not defined herein shall have the meaning defined for those terms in the
Pledge Agreement (as defined below).
W I T N E S S E T H:
-------------------
RECITALS.
- --------
A. The Borrower, the Agent and the Lenders have entered into a
certain Credit Agreement, dated as of April 15, 1996 (as amended, restated,
supplemented, extended or otherwise modified from time to time, the "Credit
------
Agreement"); and
- ---------
B. Pursuant to that certain Stock and Notes Pledge Agreement, dated
as of April 15, 1996 (as amended, restated, supplemented, extended or otherwise
modified from time to time, the "Pledge Agreement"), the Borrower has granted to
----------------
the Agent, for its benefit and the benefit of the Lenders, a security interest
in the Collateral; and
C. Pursuant to Section 4.1 of the Credit Agreement and Section 4.8
of the Pledge Agreement, the Borrower is required to execute and deliver to the
Agent this Supple ment, and the Borrower desires to execute and deliver this
Supplement to satisfy such requirement and condition;
NOW, THEREFORE, in consideration of the premises and in order to
ensure the Borrower's compliance with the Credit Agreement, the Borrower hereby
agrees as follows:
SECTION 1. Additional Pledge. As security for the payment and
-----------------
performance of the Secured Obligations, the Borrower hereby:
(a) pledges, assigns, charges, mortgages, delivers, sets over,
conveys and transfers to the Agent, for its benefit and the ratable benefit of
the Lenders and grants to the
<PAGE>
Agent, for its ratable benefit and the benefit of the Lenders, a security
interest in all of Borrower's right, title and interest in and to
(i) the shares of capital stock more particularly described in
Schedule I hereto and the certificates evidencing such shares (the "Additional
- ---------- ----------
Pledged Shares") and all cash, instruments and other property from time to time
- --------------
received, receivable or otherwise distributed in exchange for any and all of
such Additional Pledged Shares;
(ii) the notes and other instruments more particularly described in
Schedule I hereto (the "Additional Pledged Notes") and all interest, cash,
- ---------- ------------------------
instruments or other property from time to time received, receivable or
otherwise distributed in exchange for any and all of such Additional Pledged
Notes;
(iii) all rights and interests of Borrower under any pledge or security
agreements pledging to the Borrower or granting to the Borrower a security
interest in any collateral security for the Additional Pledged Notes; and
(iv) all other Collateral relating to the Additional Pledged Shares or the
Additional Pledged Notes (the items described in clauses (i) through (iv) of
this subsection (a), collectively, the "Additional Pledged Collateral"); and
-----------------------------
(b) delivers to the Agent, for its benefit and the benefit of the
Lenders and any other holder of any Obligations, all of Borrower's right, title
and interest in and to the certificates and instruments evidencing the
Additional Pledged Shares and the Additional Pledged Notes, accompanied by
instruments of transfer or assignment, duly executed in blank.
SECTION 2. Representations and Warranties. Borrower hereby (a)
------------------------------
represents and warrants that the Additional Pledged Notes evidence the amount of
the outstanding indebtedness for money borrowed of the respective obligors
thereof, and the Additional Pledged Notes evidence the amount of outstanding
indebtedness for money borrowed of the obligors indicated on Schedule I hereto;
----------
(b) represents and warrants that the Borrower is the legal and beneficial owner
of the Additional Pledged Shares and the Additional Pledged Notes, free and
clear of any lien, security interest, option or other charge or encumbrance
except for the security interest created by the Pledge Agreement as supplemented
by this Supplement; and (c) restates each representation and warranty set forth
in Section 3.1 of the Pledge Agreement, as supplemented by this Supplement, as
of the date hereof with respect to the Additional Pledged Shares and the
Additional Pledged Notes.
SECTION 3. Additional Pledged Collateral. By execution and
-----------------------------
delivery of this Supplement, the Additional Pledged Collateral shall become a
part of the Collateral referred to in the Pledge Agreement and shall secure the
Secured Obligations as if such Additional Pledged Collateral were Collateral on
the Closing Date, and shall be subject to all of the terms and conditions
governing Collateral under the Pledge Agreement. From and after the date hereof,
Attachment 1 to the Pledge Agreement is hereby amended to add the Additional
Pledged Notes
<PAGE>
and Attachment 2 to the Pledge Agreement is hereby amended to add the Additional
Pledged Shares.
SECTION 4. Binding Effect. This Supplement shall become effective
--------------
when it shall have been executed by the Borrower and thereafter shall be binding
upon the Borrower and shall inure to the benefit of the Agent and the Lenders.
Upon the effectiveness of this Supplement, this Supplement shall be deemed to be
a part of and shall be subject to all the terms and conditions of the Pledge
Agreement. The Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders.
SECTION 5. Governing Law; Terms. THIS SUPPLEMENT SHALL BE DEEMED
--------------------
TO BE A CONTRACT MADE UNDER AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Pledge Agreement, terms
defined in Article 9 of the U.C.C. are used herein as therein defined.
SECTION 6. Execution in Counterparts. This Supplement may be
-------------------------
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Supplement to be duly
executed and delivered under seal by its duly authorized officer as of the date
first above written.
BRUNSWICK BIOMEDICAL
CORPORATION
By:_________________________________
Name
Title:
Acknowledged and Agreed to:
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, as Agent
By:______________________________
Name:
Title:
<PAGE>
SCHEDULE I
----------
to
Supplement to Pledge Agreement
------------------------------
Additional Pledged Notes:
- ------------------------
Issuer/ Date of Face Outstanding Maturity
Maker Instrument Amount Principal Amount Date
- ------- ---------- ------ ---------------- --------
Additional Pledged Shares:
- -------------------------
Class of Number of Certificate Percentage
Issuer Capital Stock Shares Number(s) of Outstanding
- ------ ------------- --------- ----------- --------------
<PAGE>
EXHIBIT 3(D)
WARRANT PURCHASE AGREEMENT
BETWEEN
BRUNSWICK BIOMEDICAL CORPORATION
AND
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
Dated as of April 15, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
RECITALS: 1
SECTION 1. Definitions 1
(a) Defined Terms 1
SECTION 2. Purchase and Sale of Warrants; Closing 11
SECTION 3. Investment Representations 11
SECTION 4. Conditions Precedent 12
SECTION 5. Warranties, etc. 13
(a) Credit Agreement Warranties 13
(b) Power, Authority, etc. 13
(c) Due Authorization 13
(d) Validity, etc. 13
(e) Capitalization and Ownership of the Company 13
(f) Authorization and Issuance of Warrants 14
(g) Securities Laws 14
(h) No Integration of Issue 14
SECTION 6. Covenants 15
(a) Financial and Business Information 15
(b) Public Company Information 16
(c) Maintenance of Corporate Existences, etc. 16
(d) Maintenance of Books and Records 16
(e) Inconsistent Agreements 16
(f) Organic Documents 16
(g) Transactions with Affiliates 17
(h) Issuance of Additional Rights, Options and Warrants 17
SECTION 7. Warrant Certificates 18
SECTION 8. Execution of Warrant Certificates 18
SECTION 9. Registration 18
SECTION 10. Registration of Transfers and Exchanges 18
SECTION 11. Exercise of Warrants; Conversion of Warrants 20
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 12. Payment of Taxes 21
SECTION 13. Mutilated or Missing Warrant Certificates 21
SECTION 14. Reservation of Warrant Shares. 22
SECTION 15. Adjustment of Exercise Price and Number of
Warrant Shares Issuable 22
(a) Adjustment for Change in Capital Stock of the Company 22
(b) Adjustment for Stock Issues 23
(c) Adjustment for Convertible Securities Issue 24
(d) Adjustment for Right, Option and Warrant Issues 25
(e) Consideration Received 26
(f) Special Adjustments 27
(g) When No Adjustment Required 28
(h) Determination of Fair Market Value per Share; Notice of
Adjustment 28
(i) Reorganization of the Company 29
(j) The Merger.................................................... 29
(k) When Issuance or Payment May Be Deferred 30
(l) Adjustment in Number of Shares 31
SECTION 16. Fractional Interests 31
SECTION 17. Notice to Warrant Holders 31
SECTION 18. Cash Distributions and Dividends 33
SECTION 19. Put Rights; Tag-Along Rights and Registration
Rights 33
(a) Put by Holders 33
(b) Closing 35
(c) Restrictions on Purchase 35
(d) Tag-Along Rights 36
(e) Limitation on Put Rights of Others 37
(f) Severability 37
SECTION 20. Notices 38
SECTION 21. Costs and Expenses 39
SECTION 22. Indemnification 39
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 23. Successors 40
SECTION 24. Termination 41
SECTION 25. Governing Law 41
SECTION 26. Benefits of this Agreement 41
SECTION 27. Counterparts 41
SECTION 28. Amendments; Waiver 41
SECTION 29. Waiver of Jury Trial 41
SECTION 30. Jurisdiction 42
SECTION 31. Specific Performance 42
SECTION 32. Confidentiality 43
SECTION 33. Entire Agreement 43
</TABLE>
Exhibit A Form of Series A Warrant Certificate
Exhibit B Form of Series B Warrant Certificate
Exhibit C Schedule of Exceptions
Exhibit D Holders of the Company's Stock
Exhibit E-1 Existing Warrants
Exhibit E-2 Shares Reserved under Stock Option Plan
Exhibit F Existing Registration Rights
Exhibit GOpinion of Counsel to STI
(to be delivered on the Merger Consummation Date)
-iii-
<PAGE>
WARRANT PURCHASE AGREEMENT
--------------------------
THIS WARRANT PURCHASE AGREEMENT (this "Agreement") is made and entered
---------
into as of April 15, 1996 by and between BRUNSWICK BIOMEDICAL CORPORATION, a
Massachusetts corporation ("Brunswick"), and INTERNATIONALE NEDERLANDEN (U.S.)
---------
CAPITAL CORPORATION, a Delaware corporation (the "Purchaser").
---------
W I T N E S S E T H:
-------------------
RECITALS:
- ---------
A. Simultaneously herewith, the Purchaser is entering into a Credit
Agreement, dated of even date herewith, by and among Brunswick, the Purchaser
and various other lenders that may become parties thereto (the "Lenders") and
-------
the Purchaser in its capacity as Agent for the Lenders (the "Agent");
-----
B. It is a condition precedent to the extensions of credit by the
Purchaser to Brunswick contemplated by the Credit Agreement that Brunswick agree
to issue to the Purchaser (1) Series A Warrants initially exercisable for 33,370
shares of Class A Common Stock, par value $0.01 per share, of the Company
("Class A Common Stock") for an exercise price of $0.01 per share and (2) Series
--------------------
B Warrants initially exercisable for 36,298 shares of Class A Common Stock for
an exercise price of $27.55 per share;
C. Shares of Class A Common Stock are convertible, at the option of
each of the holders thereof, into shares of voting common stock, par value $0.01
per share, of Brunswick (the "Voting Common Stock"); and
-------------------
D. The Purchaser and Brunswick desire to set forth in this Agreement
the terms and provisions of the Series A Warrants and the Series B Warrants
(collectively, the "Warrants") and the conditions to the issuance and sale of
--------
the Warrants to the Purchaser;
NOW, THEREFORE, in consideration of the premises and the agreements
herein set forth and to induce the Purchaser to proceed with the transactions
contemplated by the Credit Agreement, the parties hereto, intending to be
legally bound, hereby agree as follows:
-1-
<PAGE>
SECTION 1. Definitions.
-----------
(a) Defined Terms. Capitalized terms appearing herein and not
-------------
otherwise defined herein shall have the meanings ascribed thereto in the Credit
Agreement (irrespective of whether the Credit Agreement is in effect or has been
terminated). The following terms (whether or not underscored) when used in this
Agreement, including its preamble and recitals, shall, except where the context
otherwise requires, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"Affiliate" of any Person means any other Person which, directly or
---------
indirectly, controls or is controlled by or under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (a)
to vote 5% or more of the securities having ordinary voting power for the
election of directors of such Person, or (b) to direct or cause the direction of
the management or policies of such Person whether by contract or otherwise;
provided that no Lender shall be deemed to constitute an Affiliate of the
- -------- ----
Company solely by virtue of holding Warrants or Warrant Shares.
"Agent" is defined in Recital A.
----- ---------
"Agreement" means this Warrant Purchase Agreement as in effect on the
---------
date hereof and as hereafter amended, supplemented, restated or otherwise
modified.
"Authorized Officer" means, relative to the Company, those officers of
------------------
the Company whose signature, incumbency and authority shall have been certified
to the Agent and the Lenders pursuant to Section 4.1.1 or Section 4.2.1 of the
------------- -------------
Credit Agreement.
"Brunswick" is defined in the preamble to this Agreement.
---------
"Business Day" means any day which is neither a Saturday or Sunday nor
------------
a legal holiday on which banks are authorized or required to be closed in New
York, New York.
"Capitalized Lease Liabilities" shall have the meaning set forth in
-----------------------------
the Credit Agreement.
"Cash Equivalent Investment" means, at any time:
--------------------------
(a) any direct obligation issued or guaranteed by the United States
of America or any agency or instrumentality thereof and backed by the full faith
and credit of the United States of America, or issued by any state or political
subdivision or public
-2-
<PAGE>
instrumentality thereof, (i) which has a remaining maturity at the time of
purchase of not more than one (1) year or which is subject to a repurchase
agreement with any Lender or any Eligible Lending Institution exercisable within
one (1) year from the time of purchase so long as such direct obligation remains
in the possession of the Borrower or in the possession of any Lender and (ii)
which, in the case of obligations of any state or political subdivision or
public instrumentality thereof, is rated AA or better by Moody's Investors
Service, Inc.;
(b) certificates of deposit, time deposits, demand deposits and
bankers' acceptances, having a remaining maturity at the time of purchase of not
more than one (1) year, issued by any Lender or by any Eligible Lending
Institution;
(c) corporate obligations rated Prime-1 by Moody's Investors Service,
Inc. or A-1 by Standard & Poor's Corporation, having a remaining maturity at the
time of purchase of not more than one (1) year;
(d) shares of funds registered under the Investment Company Act of
1940, as amended, having assets of at least $100,000,000 which invest only in
obligations described above and which shares are rated by Moody's Investors
Service, Inc. or Standard & Poor's Corporation in one of the two highest rating
categories assigned by such agencies for obligations of such nature.
"Change of Control" means (a) at any time prior to the Merger
-----------------
Consummation Date, (i) the sale, transfer or other disposition by EM Industries,
Inc. or Mylan Laboratories, Inc. of any shares of Stock held by such Persons as
of the Closing Date other than to an affiliate of such Person, or (ii) the
failure of James H. Miller (or a Person of comparable qualifications and
experience) to serve as chief executive officer of the Company, and (b) from and
after the Merger Consummation Date, (i) the acquisition by any Person or group
of Persons (other than an employee benefit plan solely for employees of STI and
its subsidiaries) of beneficial ownership of more than 20% of the outstanding
Stock of the Company (within the meaning of Section 13(d) or 14(d) of the
Securities and Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder) other than as a result of the Merger; (ii) during any
period of 12 consecutive months (whether commencing before or after the Closing
Date), the failure of individuals who on the first day of such period were
directors of the Company (together with any replacement or additional directors
who are nominated or elected by a majority of directors then in office) to
constitute a majority of the Board of Directors of the Company; or (iii) the
failure of James H. Miller (or a Person of comparable qualifications and
experience) to serve as chief executive officer of the Company.
"Class A Common Stock" means (a) at any time prior to the Merger
--------------------
Consummation Date, Class A Common Stock, par value $0.01 per share, of
Brunswick, convertible into Voting Common Stock of Brunswick at the option of
the Holder, and (b) at
-3-
<PAGE>
any time on and after the Merger Consummation Date, non-voting Common Stock of
STI, convertible into voting Common Stock of STI at the option of the Holder.
"Closing" means the closing of the sale and purchase of the Warrants
-------
as contemplated hereby.
"Closing Date" means April 15, 1996, the date of the Closing.
------------
"Common Stock" means shares now or hereafter authorized of any class
------------
of common stock of the Company and any other capital stock of the Company,
however designated, that has the right (subject to any prior rights of any class
or series of preferred stock) to participate in any distribution of the assets
upon voluntary or involuntary liquidation, dissolution or winding up of the
Company or in the earnings of the Company without limit as to per share amount,
and shall include, without limitation, the presently authorized 1,903,000 shares
of Voting Common Stock and 72,000 shares of Class A Common Stock . "Common
Stock" shall not include preferred or special stock.
"Company" means (a) at all times prior to the Merger Consummation
-------
Date, Brunswick, and (b) at all times on and after the Merger Consummation Date,
STI.
"Contract Value per Share" means the value determined in accordance
------------------------
with paragraphs (i), (ii) and, if the Company is not a Public Company, (iii)
below, and shall equal the highest number yielded by such determination:
(i) If the Common Stock is traded on a national securities exchange
or quoted in a national inter-dealer quotation system, the Contract Value
per Share determined pursuant to this paragraph (i) shall be an amount
equal to the average of the Quoted Prices for Common Stock for the thirty
(30) consecutive trading days commencing forty-five (45) trading days
before the date of determination.
(ii) The Contract Value per Share determined pursuant to this
paragraph (ii) shall equal the quotient of (A) seven (7.0) times EBITDA for
the twelve-month period ending on the last day of the fiscal month ending
immediately prior to the date of determination (for any twelve-month period
ending prior to the first anniversary of the Merger Consumation Date,
determined on a pro forma basis as if the Merger had occurred on the first
--- -----
day of such period), minus (1) the outstanding principal amount of Funded
-----
Indebtedness as of the last day of the fiscal month ending immediately
prior to the date of determination, plus (2) cash and Cash Equivalent
----
Investments on the balance sheet of the Company and its Subsidiaries as of
the last day of the fiscal month ending immediately prior to the date of
determination, all determined in accordance with GAAP, divided by (B) the
----------
number of Fully Diluted Shares as of the date of determination.
-4-
<PAGE>
(iii) If the Company is not a Public Company, the Contract Value per
Share determined pursuant to this paragraph (iii) shall be equal to the
Fair Market Value per Share.
"Conversion Factor" means the greater of (a) the actual number of
-----------------
whole and fractional shares of Common Stock of STI issued to shareholders of
Brunswick in respect of one share of Common Stock of Brunswick as a result of
the Merger and (b) 2.5046.
"Conversion Right" is defined in Section 11(b).
---------------- -------------
"Convertible Securities" is defined in Section 15.
---------------------- ----------
"Credit Agreement" means the Credit Agreement, dated of even date
----------------
herewith, by and among the Company, the Purchaser and various other Lenders that
may become parties thereto and the Purchaser as Agent for the Lenders, as in
effect on the date hereof and as hereafter amended, supplemented, restated or
otherwise modified.
"EBITDA" shall have the meaning specified for such term in the Credit
------
Agreement as in effect on the Closing Date.
"Eligible Lending Institution" means a financial institution having a
----------------------------
branch or office in the United States and having capital and surplus and
undivided profits aggregating at least $100,000,000 and whose long-term debt
securities are rated Prime-1 or better by Moody's Investor Service, Inc. or A-1
or better by Standard & Poor's Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time.
"Excluded Shares" means (i) shares of Common Stock to be issued upon
---------------
exercise or conversion of the Warrants, (ii) shares of Common Stock issued upon
exercise or conversion of any Option Securities granted prior to the Closing
Date and (iii) shares of Common Stock issued upon exercise or conversion of any
Option Securities granted pursuant to a stock incentive plan approved in good
faith by the Board of Directors of the Company after the Merger Consummation
Date.
"Exercise Price" means, with respect to the Series A Warrants, the
--------------
Series A Exercise Price and, with respect to the Series B Warrants, the Series B
Exercise Price.
"Fair Market Value per Share" means the fair market value of a share
---------------------------
of Common Stock of the Company, and shall be equal to the quotient of (A) the
fair market value of the Company and its Subsidiaries taken as a whole on the
date of determination, taking into account all the factors relevant thereto,
including, without limitation, the highest of the prices
-5-
<PAGE>
that could be obtained from an arms'-length sale without time constraints of (1)
all or substantially all of the assets of the Company and the Subsidiaries
subject to or after satisfaction of all liabilities of the Company and the
Subsidiaries or (2) all of the Fully Diluted Shares, whether by stock sale,
merger, consolidation or otherwise, divided by (B) the number of Fully Diluted
------- --
Shares on the date of determination. In no event shall the Fair Market Value per
Share be reduced or discounted on the basis that any securities to be valued on
the basis of such Fair Market Value per Share may represent the right to acquire
a minority interest in the Company or may not be freely transferable under
federal or state securities laws, or for any other reason. The Fair Market Value
per Share shall be determined as provided in clause (a) or (b) below, as
applicable.
(a) In any circumstances in which the Fair Market Value per Share is
required to be determined, not later than ten (10) days following the date as of
which such determination is required to be made, the Board of Directors of the
Company shall determine in good faith the Fair Market Value per Share, and the
Company shall give to the Holders (or, if such determination affects less than
all of the Holders, to the Holders so affected) prompt written notice of such
determination. If within thirty (30) days after the date such notice is given,
the Company and the Required Holders agree upon the Fair Value per Share, then
the Fair Market Value per Share shall be as so agreed. If within such 30-day
period, the Company and the Required Holders do not agree upon such Fair Market
Value per Share, then the Fair Market Value per Share shall be determined as
provided in clause (b) of this definition.
(b) If the Required Holders and the Company do not agree upon such
Fair Market Value per Share within the 30-day period specified in clause (a) of
this definition, then the Required Holders and the Company shall appoint a
recognized investment banking firm of national reputation, reasonably acceptable
to the Required Holders and the Company. If the Company and the Required Holders
cannot agree on the appointment of a mutually acceptable investment banking
firm, or if the firm so appointed declines or fails to serve, then the Required
Holders and the Company shall each choose one such investment banking firm and
the respective firms so chosen shall appoint another recognized investment
banking firm of national reputation. The investment banking firm so selected
shall appraise the value of the Company (which shall be in the form of a written
report signed by such investment banking firm), and such appraised value of the
Company determined as herein provided shall be final and conclusive and binding
on the Company and the Holders. If the appraised value of the Company as
determined by such investment banking firm is equal to or less than that
determined by the Board of Directors of the Company in accordance with clause
(a) of this definition, then all fees and expenses of such investment banking
firm shall be paid by the Required Holders requesting such appraisal. If the
appraised value of the Company as determined by such investment banking firm is
greater than that determined by the Board of Directors in accordance with clause
(a) of this definition, then all fees and expenses of such investment banking
firm shall be paid by the Company.
-6-
<PAGE>
"Fiscal Quarter" means any quarter of a Fiscal Year.
--------------
"Fiscal Year" means, (a) at any time prior to the Merger Consummation
-----------
Date, the accounting period of Brunswick commencing on the Closing Date and
ending June 30, 1996 or, if Brunswick shall have changed its Fiscal Year end to
July 31 in contemplation of the Merger, July 31, 1996 and each twelve-month
accounting period ending June 30 or July 31, as the case may be, thereafter, and
(b) from and after the Merger Consummation Date, the accounting period of STI
commencing on the Merger Consummation Date and ending on the first July 31 to
occur thereafter, and each twelve-month accounting period ending on July 31
thereafter. References to a Fiscal Year with a number corresponding to any
calendar year (e.g., the "1996 Fiscal Year") refer to the Fiscal Year ending on
----
a date in such calendar year.
"Fully Diluted Shares" means, as of any date of determination, the
--------------------
number of shares of Common Stock of the Company equal to the sum of (i) the
number of shares of Common Stock outstanding on such date of determination, plus
(ii) the number of Warrant Shares receivable upon conversion of all outstanding
Warrants as of such date of determination pursuant to Section 11(b), plus (iii)
-------------
the number of shares of Common Stock that would be issued in respect of all
Option Securities of the Company outstanding and immediately exercisable as of
such date of determination if such Option Securities were to be converted into
shares of Common Stock in accordance with the following formula:
X = Y (A - B)
---------
A
where: X = the number of shares to be issued to the holders of
such Option Securities;
Y = the number of shares for which such Option
Securities are exercisable;
A = the Fair Market Value per Share as of the
date of determination; and
B = the exercise price for such Option Securities;
provided, however, that the term "Fully Diluted Shares" as used in the
- -------- -------
definition of Fair Market Value per Share shall mean the number of issued and
outstanding shares of Common Stock plus the number of Warrant Shares purchasable
and receivable upon exercise of the rights represented by the Warrant
Certificates pursuant to Section 11(a).
-------------
-7-
<PAGE>
"Funded Indebtedness" means (i) the indebtedness under the Credit
-------------------
Agreement, (ii) Capitalized Lease Liabilities, and (iii) all other indebtedness
of the Company and its Subsidiaries which matures more than one year from the
date of its creation or matures within one year from such date but is renewable
or extendable, at the option of the Company or any of its Subsidiaries, to a
date more than one year from such date or arises under an agreement which
obligates the lender or lenders to extend credit during a period of more than
one year from such date.
"GAAP" means generally accepted accounting principles in effect from
----
time to time in the United States.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Holders" means, collectively, Purchaser and any subsequent registered
-------
holders, from time to time, of Warrant Securities.
"Indemnified Liabilities" is defined in Section 22.
----------------------- ----------
"Indemnified Parties" is defined in Section 22.
------------------- ----------
"Legally Available Funds" means, with respect to any purchase of
-----------------------
Warrant Securities pursuant to Section 19(a), the amount of funds of the Company
-------------
legally available therefor under the corporate laws under which the Company is
organized and existing.
"Lenders" is defined in Recital A.
------- ---------
"Lien" means any mortgage, pledge, hypothecation, assignment, charge,
----
deposit arrangement, encumbrance, lien (statutory or other), adverse claim or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing lease involving substantially the same
economic effect as any of the foregoing and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Loans" shall have the meaning set forth in the Credit Agreement.
-----
"Merger" means the merger of Brunswick with and into STI, with STI
------
being the surviving corporation.
-8-
<PAGE>
"Merger Consummation Date" means the date on which the Merger has been
------------------------
consummated and all conditions set forth in Section 4.2 of the Credit Agreement
have been satisfied or waived in writing by the Lenders and the Agent.
"Minimum Price" is defined in Section 15.
------------- ----------
"Obligations" means all obligations of the Company with respect to the
-----------
repayment or performance of any obligations (monetary or otherwise) of the
Company arising under or in connection with the Credit Agreement, the "Notes" or
the other "Loan Documents" (as such terms are defined in the Credit Agreement)
and the Warrant Documents.
"Option Securities" is defined in Section 15.
----------------- ----------
"Organic Document" means, relative to any Person, its articles or
----------------
certificate of incorporation or organization or certificate of limited
partnership, its by-laws, partnership or operating agreement or other
organizational documents, and all stockholders agreements, voting trusts and
similar arrangements applicable to any of its Stock or partnership interests or
other ownership interests, in each case, as amended.
"Person" means any natural person, corporation, partnership, limited
------
liability company, firm, association, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Preferred Stock" means shares now or hereafter authorized of any
---------------
class of capital stock of the Company other than Common Stock, and shall
include, without limitation, the presently authorized 1,400,000 shares of
Preferred Stock, $0.01 par value, of which (i) 65,000 shares have been
designated Series A Preferred Stock, 64,665 shares of which are outstanding,
(ii) 30,000 shares have been designated Series B Preferred Stock, 28,144 shares
of which are outstanding, (iii) 380,000 shares have been designated Series C
Preferred Stock, 374,462 shares of which are outstanding, (iv) 50,000 shares
have been designated Series D Preferred Stock, 45,695 shares of which are
outstanding, (v) 30,000 shares have been designated Series E Preferred Stock,
25,816 shares of which are outstanding, (vi) 210,000 shares have been
designated Series F Preferred Stock, 208,710 shares of which are outstanding,
and (vii) 635,000 shares are undesignated and unissued.
"Prospective Purchaser" shall have the meaning set forth in Section
--------------------- -------
19(d).
- -----
"Public Company" means a company (i) which is subject to the reporting
--------------
requirements of Section 15(d) of the Exchange Act, or (ii) any of whose
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act.
"Put Closing Date" is defined in Section 19(b).
---------------- -------------
-9-
<PAGE>
"Put Event" means any of the following: (a) any representation or
---------
warranty of the Company under any Warrant Document is or shall be incorrect when
made in any material respect; (b) the Company shall default in the due
performance and observance of any of its obligations under any Warrant Document
and, in the case of any such default other than a default of the Company's
obligations under Section 6(l), such default shall have continued for a period
------------
of thirty (30) days after written notice thereof has been given to the Company
by the Required Holders; (c) an Event of Default shall have occurred under the
Credit Agreement; (d) a merger or consolidation of the Company with or into any
other Person (other than the Merger if consummated in accordance with the
provisions of Section 15(j)) or any acquisition of the Company by means of a
-------------
share exchange; and (e) a Change of Control.
"Put Exercise Notice" is defined in Section 19(a).
------------------- -------------
"Put Purchase Price" is the amount payable to each Holder for such
------------------
Holder's Warrant Securities, as calculated in accordance with Section 19(a).
-------------
"Put Notice" is the written notice to the Company specifying the
----------
number and type of Warrant Securities with respect to which the Put Right is
being exercised.
"Put Right" is the right of each Holder to require that the Company
---------
purchase all or any portion of the Warrant Securities then owned by such Holder.
"Quoted Price" of Common Stock for each day means the last reported
------------
sales price of Common Stock on such day as reported by NASDAQ or, if Common
Stock is listed on a national securities exchange, the last reported sales price
of Common Stock on such exchange (which shall be consolidated trading if
applicable to such exchange) on such day, or if not so reported or listed, the
average of the last reported bid and ask prices of Common Stock on such day, in
each case as appropriately adjusted for any stock splits or reverse stock splits
occurring after the Closing Date.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement, dated of even date herewith, between the Company and the Purchaser,
as in effect on the date hereof and as hereafter amended, supplemented, restated
or otherwise modified.
"Regulatory Approval" means each and every approval, consent, filing
-------------------
and registration by or with any federal, state or other regulatory authority
(domestic or foreign) necessary to authorize or permit the execution, delivery
or performance of this Agreement or any other Warrant Document, for the validity
or enforceability hereof or thereof or for the consummation of the transactions
contemplated hereby or thereby.
"Required Holders" means Holders holding at least 66-2/3% of the
----------------
Warrant Securities outstanding (treating all Warrants as fully exercised for the
Warrant Shares to which
-10-
<PAGE>
Holders would be entitled upon exercise of such Warrants) or, if any matter
affects the interest of less than all of the Holders, then Holders holding at
least 66-2/3% of the Warrant Securities so affected, as the context may require.
"Restriction on Purchase" exists if, at the time of a Put Closing, (i)
-----------------------
the purchase of such Warrant Securities would result in a default under or a
breach of any Restrictive Provision (assuming that the covenants applicable to
the Company at the end of the Fiscal Quarter in which such purchase is to occur
were applicable on the date of such purchase), or (ii) the Company would not
have sufficient Legally Available Funds to pay the Purchase Price for the
Warrant Securities.
"Restrictive Provision" means any of the financial covenants contained
---------------------
in Section 6.2.4 or the negative covenants contained in Section 6.2.8 of the
Credit Agreement, in each case as the same may be amended from time to time;
provided, however, that to the extent noncompliance with any such covenant as a
- -------- -------
result of the purchase by the Company of Warrant Securities is waived in
accordance with Section 9.1 of the Credit Agreement, such covenant shall not
constitute a Restrictive Provision.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Securities Legend" is defined in Section 10.
----------------- ----------
"Selling Holder" is defined in Section 19(c).
-------------- -------------
"Selling Holder Notice" is defined in Section 19(d).
--------------------- -------------
"Selling Holder Offer" is defined in Section 19(d).
-------------------- -------------
"Series A Exercise Price" means (a) at any time prior to the Merger
-----------------------
Consummation Date, $.0.01 per Warrant Share and (b) at any time on or after the
Merger Consummation Date, an amount per share equal to $0.01 divided by the
Conversion Factor, in each case as adjusted as herein provided.
"Series A Warrant Certificates" means the certificates evidencing the
-----------------------------
Series A Warrants in the form of Exhibit A.
---------
"Series A Warrants" means the warrants referred to in clause (1) of
-----------------
Recital B as evidenced by the Series A Warrant Certificates.
-11-
<PAGE>
"Series B Exercise Price" means (a) at any time prior to the Merger
-----------------------
Consummation Date, $27.55 per Warrant Share and (b) at any time on or after the
Merger Consummation Date, an amount per Warrant Share equal to $27.55 divided by
the Conversion Factor, in each case as adjusted as herein provided.
"Series B Warrant Certificates" means the certificates evidencing the
-----------------------------
Series B Warrants in the form of Exhibit B.
---------
"Series B Warrants" means the warrants referred to in clause (2) of
-----------------
Recital B as evidenced by the Series B Warrant Certificates.
"Stock" means any capital stock of the Company.
-----
"Subsidiary" of any corporation means any other corporation greater
----------
than 50% of the outstanding shares of Stock of which having ordinary voting
power for the election of directors is owned directly or indirectly by such
corporation, and, except as otherwise indicated herein, references to
Subsidiaries shall refer to Subsidiaries of the Company.
"Substitute Securities" is defined in Section 15.
--------------------- ----------
"Transfer Agent" is defined in Section 14.
-------------- ----------
"Voting Common Stock" means (a) at any time prior to the Merger
-------------------
Consummation Date, voting Common Stock, par value $0.01 per share, of Brunswick,
and (b) at any time on and after the Merger Consummation Date, voting Common
Stock of STI.
"Warrant Certificates" means, collectively, the Series A Warrant
--------------------
Certificates and the Series B Warrant Certificates.
"Warrant Documents" means, collectively, this Agreement, the Warrants,
-----------------
the Registration Rights Agreement and any other document, instrument or
agreement executed or delivered in connection with any of the foregoing to which
the Company is a party, but excluding the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement).
"Warrant Securities" means, collectively, the Warrants and Warrant
------------------
Shares.
"Warrant Shares" means the securities which a Holder may acquire upon
--------------
exercise or conversion of a Warrant, together with any other securities which
such Holder may acquire on account of any such securities, including, without
limitation, as the result of the shares of Class A Common Stock being converted
into shares of Voting Common Stock and/or any dividend or other distribution on
Common Stock, any split-up of such Common Stock, or
-12-
<PAGE>
in accordance with a recapitalization, merger, consolidation, share exchange,
reorganization or other transaction or series of related transactions in which
shares of Common Stock are changed into or exchanged for securities of another
corporation (including the Merger), or the exercise of any preemptive right (or
the exercise or conversion of any security which such Holder may acquire in
connection with the exercise of any preemptive right) with respect to any such
Common Stock.
"Warrants" means the Series A Warrants and Series B Warrants, together
--------
with any warrants issued in substitution or replacement therefor.
(b) Cross-References. Unless otherwise specified, references in this
----------------
Agreement to any Article or Section are references to such Article or Section of
this Agreement, and unless otherwise specified, references in any Article,
Section, or definition to any clause are references to such clause of such
Section, Article or definition.
SECTION 2. Purchase and Sale of Warrants; Closing.
--------------------------------------
(a) Subject to the funding of the Bridge Loan under the Credit
Agreement, Brunswick hereby agrees to sell to the Purchaser and, subject to the
provisions of Section 4, the Purchaser hereby agrees to purchase from Brunswick,
---------
for a purchase price of $1.00 and other good and valuable consideration, all of
which shall be deemed to have been received by the Company upon the funding of
the Bridge Loan under the Credit Agreement, (1) Series A Warrants to purchase
33,370 shares of Class A Common Stock of Brunswick for an initial exercise price
of $0.01 per share and (2) Series B Warrants to purchase 36,298 shares of Class
A Common Stock of Brunswick for an initial exercise price of $27.55 per share.
(b) The sale and purchase of the Warrants shall take place at the
Closing at the offices of King & Spalding, 191 Peachtree Street, Atlanta,
Georgia 30303, at 10:00 a.m. on April 15, 1996, or such other place and time as
may be agreed upon by the Purchaser and the Company. At the Closing, the Company
will deliver to the Purchaser, upon payment therefor, (1) Series A Warrant
Certificates in the form of Exhibit A evidencing the Series A Warrants to be
---------
purchased by the Purchaser and (2) Series B Warrant Certificates in the form of
Exhibit B evidencing the Series B Warrants to be purchased by the Purchaser, in
- ---------
each case in such denomination or denominations as the Purchaser may request and
registered in its name or the name of its nominee and dated the Closing Date.
SECTION 3. Investment Representations. Purchaser represents and
--------------------------
warrants that it is purchasing the Warrants and any Warrant Shares issuable upon
exercise or conversion of the Warrants for its own account, for investment
purposes and not with a view to the distribution thereof; provided, however,
-------- -------
that the foregoing representation shall not be construed as imposing any
limitation on the Purchaser's right to transfer any of the Warrants or Warrant
Shares that is not otherwise expressly set forth in the Warrant Documents or
-13-
<PAGE>
required under applicable law. Each Holder agrees that it will not, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of any of the Warrant Securities (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of the Warrant Securities), except in
compliance with the Securities Act. Each Holder agrees that it will not
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the
Warrant Securities if any such disposition would cause the Company to be
required to register any Warrant Securities pursuant to Section 12(g) of the
Exchange Act.
SECTION 4. Conditions Precedent. The obligation of the Purchaser to
--------------------
purchase the Series A Warrants and the Series B Warrants on the Closing Date
pursuant to Section 2 hereof shall be subject to the prior or concurrent
---------
satisfaction of each of the conditions precedent set forth in this Section 4,
---------
except as the Purchaser shall otherwise consent:
(a) the accuracy of the representations set forth in this Agreement
and in the other Warrant Documents in all material respects;
(b) the compliance by the Company in all material respects with all
covenants and agreements required to be performed by it on or prior to the
Closing;
(c) the satisfaction of all of the conditions precedent set forth in
Sections 4.1 and 4.3 of the Credit Agreement;
- --------------------
(d) Purchaser's receipt of Warrant Certificates registered in
Purchaser's name (or in the name of a nominee of Purchaser) evidencing the
Warrants;
(e) Purchaser's receipt of the Registration Rights Agreement with
respect to the Warrants, in form and substance reasonably satisfactory to
Purchaser, duly executed and delivered by the Company and dated the Closing
Date;
(f) Purchaser's receipt of a copy of the Company's articles of
organization including provisions reasonably satisfactory to the Purchaser
relating to the Company's capital structure, certified as of a recent date by
the Secretary of the Commonwealth of Massachusetts;
(g) Purchaser's receipt of a certificate of the clerk or an assistant
clerk of the Company, together with true and correct copies of the resolutions
of the Board of Directors and, to the extent necessary, the stockholders of the
Company authorizing or ratifying the execution, delivery and performance of this
Agreement and the other Warrant Documents, authorizing the amendment to the
Company's articles of organization so that it contains the provisions referred
to in Section 4(g) and authorizing the creation and issuance of the Warrants and
------------
the Warrant Shares; and setting forth the names of the Authorized Officers of
the
-14-
<PAGE>
Company executing this Agreement and the other Warrant Documents, together with
a sample of the true signature of each such Authorized Officer;
(h) Purchaser's receipt of certified copies of all documents
evidencing any other necessary corporate action, consents and governmental
approvals or filings (if any) with respect to this Agreement and the other
Warrant Documents;
(i) Purchaser's receipt of an opinion, dated the Closing Date, from
Palmer & Dodge, counsel to the Brunswick, in form and substance reasonably
satisfactory to Purchaser and its counsel, and covering such matters as the
Purchaser may reasonably request;
(j) All proceedings taken in connection with the transactions
contemplated by this Agreement and the other Warrant Documents shall be
reasonably satisfactory in form and substance to Purchaser and its counsel, and
Purchaser and its counsel shall have received copies (executed or certified as
may be appropriate) of all documents, instruments and agreements which Purchaser
or its counsel may reasonably request in connection with the consummation of
such transactions.
SECTION 5. Warranties, etc. In order to induce Purchaser to enter
----------------
into this Agreement, to engage in the transactions contemplated herein and in
the other Warrant Documents and to purchase the Warrants hereunder, the Company
represents and warrants unto Purchaser as set forth in this Section 5, except as
---------
provided in the Schedule of Exceptions attached as Exhibit C, each and all of
---------
which representations and warranties are made as of the Closing Date and shall
survive the execution and delivery of this Agreement and the Closing hereunder:
(a) Credit Agreement Warranties. Each of the representations and
---------------------------
warranties of the Company set forth in the Credit Agreement is true and correct.
(b) Power, Authority, etc. The Company has full power and authority
----------------------
to enter into and perform its obligations under this Agreement and each of the
other Warrant Documents.
(c) Due Authorization. The execution and delivery by the Company of
-----------------
this Agreement and each of the other Warrant Documents, the performance by the
Company of its obligations hereunder and thereunder and the issuance of the
Warrants hereunder by the Company have been duly authorized by all necessary
corporate action, do not require any Regulatory Approval (except those
Regulatory Approvals already obtained), do not and will not conflict with,
result in any violation of, or constitute any default under, any provision of
any Organic Document of the Company or any Subsidiary, any agreement or
instrument to which the Company or any of it's Subsidiaries is a party or by
which it or any of its property is bound, or any law or governmental regulation
or court decree or order and will not result
-15-
<PAGE>
in or require the creation or imposition of any Lien on any of the Company's or
any Subsidiary's properties pursuant to the provisions of any such agreement or
instrument. No vote (including any vote under the rules of any securities
exchange or trading system or market on which any of the Company's securities
are listed or traded) on the part of the stockholders of the Company, other than
those which have been obtained, is required to approve or authorize the
amendment to the articles of organization provided for in Section 4(g), any of
------------
the transactions contemplated by this Agreement, any of the other Warrant
Documents or any of the Loan Documents or the authorization of the issuance of
Class A Common Stock or the Warrant Securities or any shares of capital stock to
be issued pursuant to the Loan Documents. None of the transactions contemplated
by this Agreement, any of the other Warrant Documents or any of the Loan
Documents (including the issuance of Class A Common Stock, the Warrant
Securities or any shares of capital stock to be issued pursuant to the Loan
Documents) will give rise to any payment or the acceleration of any obligation
(whether with or without the passage of time or upon the occurrence of any
event) to any director, officer or employee of the Company or any Subsidiary.
(d) Validity, etc. This Agreement and each of the other Warrant
--------------
Documents constitutes the legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject to (i) the effect
of any applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally; and (ii) the effect of general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
(e) Capitalization and Ownership of the Company. The authorized
-------------------------------------------
capital stock of the Company consists of (1) 1,903,000 shares of Voting Common
Stock, 66,780 of which will be outstanding on the Closing Date; (2) 72,000
shares of Class A Common Stock, no shares of which will be outstanding on the
Closing Date; and (3) 1,400,000 shares of Preferred Stock, $.01 par value, of
which (i) 65,000 shares have been designated Series A Preferred Stock, 64,665
shares of which are outstanding, (ii) 30,000 shares have been designated Series
B Preferred Stock, 28,144 shares of which are outstanding, (iii) 380,000 shares
have been designated Series C Preferred Stock, 374,462 shares of which are
outstanding, (iv) 50,000 shares have been designated Series D Preferred Stock,
45,695 shares of which are outstanding, (v) 30,000 shares have been designated
Series E Preferred Stock, 25,816 shares of which are outstanding, (vi) 210,000
shares have been designated Series F Preferred Stock, 208,710 shares of which
are outstanding, and (vii) 635,000 shares are undesignated and unissued. The
record and, to the best knowledge of the Company, beneficial ownership of the
outstanding capital stock of the Company as of the Closing Date is set forth in
Exhibit D. All such outstanding shares are duly authorized, validly issued,
- ---------
fully paid and nonassessable, and are not, and will not have been, issued in
violation of any preemptive rights. Except as set forth in Exhibit C,
---------
Exhibits E-1 and E-2, and the Organic Documents, no issued, no authorized but
- ------------ ---
unissued and no treasury shares of capital stock of the Company are subject to
any preemptive right, option, warrant, right of conversion or purchase or any
similar right issued or granted by the Company or, to the best knowledge of the
Company, by
-16-
<PAGE>
any of its shareholders. Except as set forth in the Organic Documents of the
Company or in Section 19, there are no agreements or understandings with respect
----------
to the voting, sale or transfer of any shares of capital stock of the Company to
which the Company or, to the best knowledge of the Company, any of its
Affiliates is a party.
(f) Authorization and Issuance of Warrants. The issuance of the
--------------------------------------
Warrants has been duly authorized and, upon delivery to Purchaser of the Warrant
Certificates therefor in accordance with the terms hereof, the Warrants will
have been validly issued and fully paid and nonassessable, free and clear of all
Liens and the issuance thereof will not give rise to any preemptive rights. The
issuance of the shares of Class A Common Stock subject to the Warrants has been
duly authorized and, when issued upon exercise of the Warrants in accordance
with the terms thereof, such shares will have been validly issued and will be
fully paid and nonassessable. The issuance of the shares of Voting Common Stock
issuable upon conversion of the Class A Common Stock has been duly authorized
and, when issued upon conversion of the Class A Common Stock in accordance with
the terms thereof, such shares will have been validly issued and will be fully
paid and nonassessable and the issuance thereof will not give rise to any
preemptive rights. 69,668 shares of Class A Common Stock have been duly reserved
for issuance upon the exercise of the Warrants. Except as set forth in the
Registration Rights Agreement and on Exhibit D, no Person has the right to
---------
demand or any other right to cause the Company to file any registration
statement under the Securities Act relating to any securities of the Company or
any right to participate in the any such registration.
(g) Securities Laws. In reliance on the investment representations
---------------
contained in Section 3, the offer, issuance, sale and delivery of the Warrants
---------
to the Purchaser as provided in this Agreement, the issuance and delivery of
Class A Common Stock upon the exercise of the Warrants by the Purchaser, and the
conversion of the Class A Common Stock into Voting Common Stock, are and will be
exempt from the registration requirements of the Securities Act and all
applicable state securities laws, as such laws are currently in effect.
(h) No Integration of Issue. Neither the Company nor any Person
-----------------------
authorized or employed by the Company as agent, broker or otherwise in
connection with the offering of the Warrants has offered the Warrants for sale
to, or solicited any offers to buy the Warrants from, or otherwise approached or
negotiated or communicated in respect thereof with, anyone other than Purchaser.
Neither the Company nor any Person acting on behalf of the Company will sell or
offer any class of securities to, or solicit any offers to buy any class of
securities from, or otherwise approach, negotiate or communicate in respect
thereof with, any Person so as to require the registration of the Warrants under
the Securities Act or any applicable state securities laws.
-17-
<PAGE>
SECTION 6. Covenants. The Company agrees with each Holder, that
---------
until the termination of this Agreement pursuant to Section 24 hereof, the
----------
Company will perform the obligations set forth in this Section 6:
---------
(a) Financial and Business Information. For so long as the Company
----------------------------------
is not a Public Company, the Company will furnish, or will cause to be
furnished, to each Holder copies of the following financial statements, reports
and information:
(i) promptly when available and in any event within ninety (90) days
after the close of each Fiscal Year, a consolidated and consolidating
balance sheet at the close of such Fiscal Year, and related consolidated
and consolidating statements of operations, retained earnings, and cash
flows for such Fiscal Year, of the Company and its Subsidiaries (with
comparable information at the close of and for the prior Fiscal Year),
certified (in the case of consolidated statements) without qualification by
Price Waterhouse LLP or other independent public accountants reasonably
satisfactory to the Required Holders, together with a report containing
management's discussion and analysis of financial condition and results of
operation of the Company and its Subsidiaries generally similar in scope to
that which would be required in an annual report on Form 10-K filed under
the Exchange Act for such Fiscal Year (delivery to the Holders of such
annual report in respect of any Fiscal Year shall satisfy the requirements
of this clause (a)(i) with respect to such Fiscal Year);
(ii) promptly when available and in any event within forty-five (45)
days after the close of each Fiscal Quarter, consolidated and consolidating
balance sheets at the close of such Fiscal Quarter, and consolidated and
consolidating statements of operations, retained earnings, and cash flows
for such Fiscal Quarter and for the period commencing at the close of the
previous Fiscal Year and ending with the close of such Fiscal Quarter, of
the Company and its Subsidiaries (with comparable information at the close
of and for the corresponding Fiscal Quarter of the prior Fiscal Year and
for the corresponding portion of such prior Fiscal Year), certified by the
chief financial or executive officer of the Company, together with a brief
report containing management's discussion and analysis of the financial
condition and results of operations of the Company and its Subsidiaries
(including a discussion and analysis of any changes compared to prior
results) generally similar in scope to that which would be required in a
quarterly report on Form 10-Q filed under the Exchange Act (delivery to the
Holders of such a quarterly report on Form 10-Q with respect to any Fiscal
Quarter will satisfy the requirements of this clause (a)(ii) with respect
to such Fiscal Quarter;
(iii) promptly when available and in any event within thirty (30) days
after the close of each calendar month of each Fiscal Year (other than a
calendar month that is the last month of a Fiscal Quarter), consolidated
and consolidating balance sheets at the close of such month, and
consolidated and consolidating statements of operations,
-18-
<PAGE>
retained earnings and cash flows for such month and for the period
commencing at the close of the previous Fiscal Year and ending with the
close of such month, of the Company and its Subsidiaries (with comparable
information at the close of and for the corresponding month of the prior
Fiscal Year and for the corresponding portion of such prior Fiscal Year),
certified by the chief executive or financial officer of the Company,
together with a brief report containing management's discussion and
analysis of the financial condition and results of operations of the
Company and its Subsidiaries (including a discussion and analysis of any
changes compared to prior results); and
(iv) promptly upon the sending or filing thereof, copies of all
reports that the Company sends to its security holders generally, and
copies of all reports and registration statements that the Company or any
of its Subsidiaries files with the SEC or any national securities exchange.
(b) Public Company Information. From and after such time as the
--------------------------
Company shall become a Public Company;
(i) Filings. The Company will file with the SEC on or before the
-------
required date all regular or periodic reports required pursuant to the
Exchange Act and deliver to each Holder, promptly upon its becoming
available, one copy of each report, notice or proxy statement sent by the
Company to its stockholders generally, and of each regular or periodic
report filed pursuant to the Exchange Act and any registration statement,
prospectus or written communication (other than transmittal letters)
pursuant to the Securities Act filed by the Company with (i) the SEC or
(ii) any national securities exchange; and
(ii) Rule 144. The Company will use its best efforts to make publicly
--------
available information concerning the Company sufficient to allow any Holder
to dispose of all or a portion of the Warrant Securities pursuant to Rule
144 (or any successor provision) promulgated by the SEC under the
Securities Act.
(c) Maintenance of Corporate Existences, etc. Except as permitted
----------------------------------------
pursuant to Section 6.2.10 of the Credit Agreement, the Company will cause to be
--------------
done at all times all things necessary to maintain and preserve the corporate
existences of the Company and its Subsidiaries.
(d) Maintenance of Books and Records. The Company will, and will
--------------------------------
cause each Subsidiary to, keep books and records reflecting all of its business
affairs and transactions in accordance with GAAP.
(e) Inconsistent Agreements. The Company will not, and will not
-----------------------
permit any Subsidiary to, enter into any agreement containing any provision
which would be violated
-19-
<PAGE>
or breached by the issuance of the Warrants or the Warrant Shares or by the
performance by the Company or any Subsidiary of its obligations under this
Agreement or under any other Warrant Documents.
(f) Organic Documents. So long as any Warrant Securities are
-----------------
outstanding, the Company's charter shall contain the provisions regarding the
Class A Common Stock set forth in its Organic Documents as constituted on the
date hereof, except that in connection with the Merger, non-substantive
modifications may be made to such provisions to reflect the Merger. The Company
shall not permit to occur any amendment, alteration or modification to its
Organic Documents, as constituted on the date hereof, the effect of which, in
Purchaser's or the Required Holders' judgment, would be to alter, impair or
adversely affect either the rights and benefits of Purchaser or the Holders or
the duties and obligations of the Company under this Agreement and the other
Warrant Documents.
(g) Transactions with Affiliates. The Company will not, and will not
----------------------------
permit any Subsidiary to, enter into, or cause, suffer or permit to exist:
(i) any arrangement or contract with any of its Affiliates of a nature
customarily entered into by Persons which are Affiliates of each other
(including management or similar contracts or arrangements relating to the
allocation of revenues, expenses or otherwise) requiring any payments to be made
by the Company or any of its Subsidiaries to any Affiliate, other than (i) any
arrangement solely among the Company and its wholly-owned Subsidiaries, and (ii)
the Merger; and
(ii) any other transaction, arrangement or contract with any of its
Affiliates which is on terms which are less favorable than are obtainable in a
transaction from any Person which is not one of its Affiliates.
(h) Issuance of Additional Rights, Options and Warrants. At any time
---------------------------------------------------
prior to the Merger Consummation Date, the Company will not issue any rights,
options or warrants to subscribe for or purchase or otherwise acquire Common
Stock or Convertible Securities, whether or not the right to exercise such
rights, options or warrants or to convert or exchange such Convertible
Securities is immediately exercisable or is conditioned upon the passage of
time, an occurrence or non-occurrence of some other event, or both.
(i) Antitakeover Statutes. The Company shall take all action
---------------------
necessary to avoid the application of any "fair price," "moratorium," "control
share acquisition," "business combination," "shareholder protection" or similar
antitakeover statute to the transactions contemplated by this Agreement or any
other Warrant Document (including the issuance of the Warrant Securities).
-20-
<PAGE>
(j) Governmental Approvals. The Company will, and will cooperate
----------------------
with the Holders to, secure all necessary consents, approvals, authorizations
and exemptions from all governmental authorities in connection with the exercise
of the Warrants, the issuance of shares of Class A Common Stock upon exercise of
the Warrants and the issuance of shares of Voting Common Stock upon the
conversion of such shares of Class A Common Stock.
(k) Issuances of Shares. The Company will not issue any shares of
-------------------
Class A Common Stock other than pursuant to the exercise of the Warrants.
(l) Registration Rights Priorities. On or prior to the Merger
------------------------------
Consummation Date, Brunswick shall cause the holders of its Preferred Stock and
all other holders of securities of the Company that are officers and directors
of the Company and have registration rights to agree, or otherwise become
subject to contractual provisions to the effect, that
(i) in the event of any registration of securities of the Company where
the intended method of distribution of such securities is by means of an
underwriting, (A) all Warrant Shares requested by the Holders to be included in
such registration and underwriting pursuant to the rights of the Holders under
the Registration Rights Agreement shall first be included before any shares of
Preferred Stock (or other securities of the Company issued in connection with
the issuance of such Preferred Stock) or other securities of the Company held by
such officers and directors shall be included in such registration and
underwriting, (B) such priority of registration rights shall be effective
notwithstanding that any other holder of securities of the Company has not
agreed that Warrant Shares may first be included in such registration and
underwriting, and (C) in order to effect such registration and underwriting of
Warrant Shares, such other holders of securities of the Company that have not so
agreed that Warrant Shares shall first be included in such registration and
underwriting may have a larger percentage of their shares included therein than
otherwise would be included absent such registration and underwriting of Warrant
Shares; and
(ii) if requested by the Company and an underwriter of Common Stock (or
other securities) of the Company, not to sell or otherwise transfer or dispose
of any Common Stock (or other securities) of the Company held by it during a
period of not less than 90 days following the effective date of a registration
statement of the Company filed under the Securities Act, provided that such
agreement may apply only to the first such registration statement of the Company
after the Merger Consummation Date that includes securities to be sold on its
behalf to the public in an underwritten offering.
The form of such agreements and provisions shall be reasonably satisfactory to
the Required Holders and, in the case of clause (i) above, shall be solely for
the benefit of the Holders of Warrant Securities and not for any other Person.
-21-
<PAGE>
SECTION 7. Warrant Certificates. The Warrant Certificates to be
--------------------
delivered pursuant to this Agreement shall be in registered form only as
provided in Section 9 and, (a) in the case of the Series A Warrants, in the form
---------
set forth as Exhibit A and, (b) in the case of the Series B Warrants, in the
---------
form of Exhibit B.
---------
SECTION 8. Execution of Warrant Certificates. Warrant Certificates
---------------------------------
shall be signed on behalf of the Company by the duly authorized officers of the
Company under its corporate seal. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the duly authorized
officers of the Company and may be printed or otherwise reproduced on the
Warrant Certificates and for that purpose the Company may adopt and use the
facsimile signature of any person who shall have been a duly authorized officer
of the Company, notwithstanding the fact that at the time the Warrant
Certificates shall be delivered or disposed of such person shall have ceased to
hold such office. The seal of the Company may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Warrant Certificates. In case any officer of the Company who shall have signed
any of the Warrant Certificates shall cease to be such officer before the
Warrant Certificates so signed shall have been disposed of by the Company, such
Warrant Certificates nevertheless may be delivered or disposed of as though such
person had not ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Warrant Certificate, shall be a proper
officer of the Company to sign such Warrant Certificate although at the date of
the execution of this Agreement such person was not such officer.
SECTION 9. Registration. The Company shall number and register the
------------
Warrant Certificates in a register as they are issued. The Company may deem and
treat the registered holder(s) of the Warrant Certificates as the absolute
owner(s) thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone) for all purposes and shall not be affected by any notice
to the contrary.
SECTION 10. Registration of Transfers and Exchanges. (a) The
---------------------------------------
Company shall from time to time register the transfer of any outstanding Warrant
Certificates in a Warrant register to be maintained by the Company upon
surrender of such Warrant Certificates accompanied by a written instrument or
instruments of transfer in form reasonably satisfactory to the Company, duly
executed by the registered Holder or Holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney; provided,
--------
however, that prior to effecting such transfer, the transferee shall agree (in a
- -------
form reasonably satisfactory to the Company) to be bound by the terms of this
Agreement, including, without limitation, Section 19. Upon any such
----------
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be canceled and
disposed of by the Company. Until the Warrant Certificate is transferred on the
Warrant register of the Company, the Company may treat the Holder as shown in
the Warrant register as the absolute owner of the Warrant Certificate for all
purposes, and notwithstanding any
-22-
<PAGE>
notice to the contrary. The Company agrees that it will make the Warrant
register available for inspection by the Holders during normal business hours at
its office and that the Holders may rely on the Warrant register for purposes of
complying with the preceding sentence.
(b) The Warrants shall be transferable in whole or in part and, in
the event that a Warrant Certificate is transferred in respect of fewer than all
the Warrants evidenced by the Warrant Certificate, a new Warrant Certificate
evidencing the remaining Warrant or Warrants will be issued and delivered
pursuant to the provisions of this Section 10 and of Section 8.
---------- ---------
(c) If any transfer of Warrants or Warrant Shares is not made
pursuant to an effective registration statement under the Securities Act, the
Holder will, if reasonably requested by the Company, deliver to the Company an
opinion of counsel, which may be counsel to the Holder but which must be
reasonably satisfactory to the Company, reasonably satisfactory in form, scope
and substance to the Company, that such Warrants or Warrant Shares may be sold
without registration under the Securities Act, as well as:
(1) an investment covenant reasonably satisfactory to the Company
signed by the proposed transferee (except that no such covenant will be required
in connection with a transfer effected in accordance with Rule 144A under the
Securities Act);
(2) an agreement by such transferee to the impression of the
restrictive legends set forth below on the Warrant Certificate or on the
certificate evidencing such Warrant Shares.
The Holders agree that each Warrant Certificate and each certificate
representing Warrant Shares will bear the following legend (the "Securities
----------
Legend"):
- ------
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
SAID SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION,
OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO
THE HOLDER) AS TO AN EXEMPTION, FROM THE
REGISTRATION PROVISIONS OF SAID ACT OR LAWS."
-23-
<PAGE>
Notwithstanding the foregoing provisions of this Section 10, the restrictions
----------
upon the transferability of the Warrant Securities and the Securities Legend
requirement set forth above in this Section 10 shall terminate as to any of the
----------
Warrant Securities (i) when and so long as such Warrant Security shall have been
effectively registered under the Securities Act and disposed of pursuant thereto
or (ii) when the Company shall have received an opinion of counsel reasonably
satisfactory to it that such Securities Legend is not required in order to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Section 10 shall terminate as to any Warrant Security, as hereinabove
----------
provided, the Holder thereof shall be entitled to receive from the Company, at
the expense of the Company, a new Warrant Certificate or certificate for Warrant
Shares bearing the following legend in place of the Securities Legend set forth
above:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE
TERMINATED ON ______________, 19__, AND ARE
OF NO FURTHER FORCE AND EFFECT."
The Holders further agree that each Warrant Certificate and each certificate
representing Warrant Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE TERMS OF A WARRANT PURCHASE
AGREEMENT, DATED AS OF APRIL 15, 1996, BETWEEN
BRUNSWICK BIOMEDICAL CORPORATION (THE "COMPANY")
AND INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
CORPORATION (THE "PURCHASER"), AND A REGISTRATION
RIGHTS AGREEMENT, DATED AS OF APRIL 15, 1996,
AMONG THE COMPANY AND THE PURCHASER, COPIES OF
EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF
THE COMPANY. ANY SALE OR TRANSFER OF THE
SECURITIES EVIDENCED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY
SALE OR TRANSFER OF SUCH SECURITIES IN
-24-
<PAGE>
VIOLATION OF SAID AGREEMENTS SHALL BE INVALID."
Warrant Certificates may be exchanged at the option of the Holder(s) thereof
when surrendered to the Company at its office for another Warrant Certificate or
other Warrant Certificates of like tenor and representing in the aggregate a
like number of Warrants, including, without limitation, upon an adjustment in
the Exercise Price or in the number of Warrant Shares purchasable upon exercise
of the Warrants. Warrant Certificates surrendered for exchange shall be canceled
and disposed of by the Company.
SECTION 11. Exercise of Warrants; Conversion of Warrants. (a)
--------------------------------------------
Subject to the terms of this Agreement, each Holder shall have the right, which
may be exercised at any time or from time to time prior to April 15, 2006, to
receive from the Company the number of fully paid and nonassessable Warrant
Shares which such Holder may at the time be entitled to receive on exercise of
all or any part of the Warrants and payment of the appropriate Exercise Price
then in effect for such Warrant Shares. A Warrant may be exercised upon
surrender to the Company at its office designated for such purpose (the address
of which is set forth in Section 20) of the certificate or certificates
----------
evidencing the Warrants to be exercised with the form of election to purchase
attached thereto properly completed and signed, upon payment to the Company of
the appropriate Exercise Price for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made in cash or by check payable to the order of the Company. Upon such
surrender of Warrant Certificates and payment of the appropriate Exercise Price,
the Company shall issue and cause to be delivered with all reasonable dispatch
(and in any event within ten (10) Business Days of such surrender and payment)
to or upon the written order of the Holder, and in the name of the Holder or the
Holder's nominee, a certificate or certificates for the number of full Warrant
Shares issuable upon the exercise of such Warrants together with such other
property (including cash) and securities as may then be deliverable upon such
exercise, including cash for fractional Warrant Shares as provided in
Section 16. Such certificate or certificates shall be deemed to have been issued
- ----------
and the Person so named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such Warrant
Certificates and payment of the Exercise Price.
(b) Subject to the terms of this Agreement, each Holder shall have
the right (the "Conversion Right"), which may be exercised at any time or from
----------------
time to time prior to April 15, 2006, to convert the Warrants, in whole or in
part, into the number of fully paid and nonassessable Warrant Shares calculated
pursuant to the following formula:
X = Y (A-B)
-------
A
-25-
<PAGE>
where: X = the number of Warrant Shares to be issued to the
Holders;
Y = the number of Warrant Shares for which the
Conversion Right is being exercised;
A = the Fair Market Value per Share as of the date of
exercise of such Conversion Right; and
B = the Exercise Price with respect to such Warrants.
A Warrant may be converted upon surrender to the Company at its office
designated for such purpose (the address of which is set forth in Section 20) of
----------
the certificate or certificates evidencing the Warrants to be converted with the
form of election to convert attached thereto properly completed and signed.
Upon such surrender of Warrant Certificates, the Company shall issue and cause
to be delivered with all reasonable dispatch (and in any event within ten (10)
Business Days of such surrender) to or upon the written order of the Holder, and
in the name of the Holder or the Holder's nominee, a certificate or certificates
for the number of full Warrant Shares issuable upon the conversion of such
Warrants together with such other property (including cash) and securities as
may then be deliverable upon such conversion, including cash for fractional
Warrant Shares as provided in Section 16. Such certificate or certificates shall
----------
be deemed to have been issued and the Person so named therein shall be deemed to
have become a holder of record of such Warrant Shares as of the date of the
surrender of such Warrant Certificates.
(c) The Warrants shall be exercisable and convertible, at the
election of the Holders thereof, either in full or from time to time in part,
and in the event that a Warrant Certificate is exercised or converted in respect
of fewer than all of the Warrant Shares issuable pursuant to such Warrant
Certificate at any time prior to the date of expiration of the Warrants, a new
Warrant Certificate evidencing the remaining Warrant or Warrants will be issued
and delivered pursuant to the provisions of this Section 11 and of Section 8.
---------- ---------
All Warrant Certificates surrendered upon exercise or conversion of Warrants
shall be canceled and disposed of by the Company. The Company shall keep copies
of this Agreement and any notices received hereunder available for inspection
during normal business hours at its office. The Company will furnish, at its
expense, copies of this Agreement and all such notices, upon request, to any
Holder of any Warrant Certificates.
SECTION 12. Payment of Taxes. The Company will pay all stamp and
----------------
transfer taxes in connection with the issuance, sale and delivery of the
Warrants hereunder, as well as all such taxes attributable to the initial
issuance of Warrant Shares upon the exercise of Warrants and payment of the
appropriate Exercise Price or upon conversion of the Warrants. The Company will
not, however, be required to pay any tax or other similar charges imposed in
connection with any transfer of any Warrant Securities. Nothing herein
-26-
<PAGE>
shall be construed as requiring the Company to pay any taxes imposed in respect
of income realized by any Holder upon the purchase, transfer or exercise of
Warrants.
SECTION 13. Mutilated or Missing Warrant Certificates. Upon receipt
-----------------------------------------
by the Company of evidence reasonably satisfactory to the Company (which shall
include an affidavit of the Holder) that any Warrant Certificate shall have been
mutilated, lost, stolen or destroyed and, in the case of loss, theft or
destruction, a customary indemnity agreement from the Holder of such Warrant
Certificate, the Company shall issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants.
SECTION 14. Reservation of Warrant Shares. The Company will at all
-----------------------------
times that any Warrant is exercisable reserve and keep available, free from
preemptive or similar rights, out of the aggregate of its authorized but
unissued capital stock or its authorized and issued capital stock held in its
treasury, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares upon exercise of Warrants, (i) the maximum number of shares of
each class of capital stock constituting a part of the Warrant Shares which may
then be deliverable upon the exercise of all outstanding Warrants and (ii) the
maximum number of shares of each class of capital stock of the Company which may
then be delivered upon the conversion of all issued Warrant Shares into Voting
Common Stock of the Company. The Company shall cause all shares of Voting Common
Stock into which shares of Class A Common Stock issuable upon exercise of the
Warrants are convertible to be (x) listed (or to be listed subject to notice of
issuance) on each securities exchange on which shares of Voting Common Stock are
listed, or (y) admitted for trading in any inter-dealer quotation system on
which shares of Voting Common Stock are traded. The Company or, if appointed,
the transfer agent for shares of each class of capital stock of the Company (the
"Transfer Agent") and every subsequent transfer agent for any shares of the
--------------
Company's capital stock issuable upon the exercise of the Warrants will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants or of the rights
of conversion of the Warrant Shares. The Company will furnish such Transfer
Agent a copy of all notices of adjustments, and certificates related thereto,
transmitted to each Holder pursuant to Section 17. Before taking any action
----------
which would cause an adjustment pursuant to Section 15 to the maximum number of
----------
Warrant Shares deliverable upon the exercise of all outstanding Warrants above
the then authorized number of shares of Class A Common Stock, the Company shall
cause to be authorized additional shares of Class A Common Stock such that such
maximum number of shares of Class A Common Stock deliverable upon exercise of
all outstanding Warrants does not exceed the number of shares of Class A Common
Stock authorized pursuant to the Organic Documents of the Company. Before taking
any action which would cause an adjustment pursuant to
-27-
<PAGE>
Section 15 to reduce the Exercise Price below the then par value (if any) of the
- ----------
Warrant Shares, the Company will take any corporate action which may, in the
opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
SECTION 15. Adjustment of Exercise Price and Number of Warrant Shares
---------------------------------------------------------
Issuable. The Exercise Price and the number of Warrant Shares issuable upon the
- --------
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of any of the events enumerated in this Section 15.
----------
(a) Adjustment for Change in Capital Stock of the Company. If the
-----------------------------------------------------
Company (i) pays a dividend or makes a distribution on any class of its Common
Stock in shares of any class of its Stock, (ii) subdivides its outstanding
shares of any class of Common Stock into a greater number of shares, (iii)
combines its outstanding shares of any class of Common stock into a smaller
number of shares, (iv) makes a distribution on any class of its Common Stock in
shares of its Stock other than Common Stock, or (v) issues by reclassification
of any class of its Common Stock any shares of its Stock, then the Exercise
Price in effect immediately prior to such action shall be proportionately
adjusted so that the Holder of any Warrant thereafter exercised may receive the
aggregate number and kind of shares of capital stock of the Company which it
would have owned immediately following such action if such Warrant had been
exercised immediately prior to such action and the shares of Class A Common
Stock issuable upon exercise of such Warrants had been converted into shares of
Voting Common Stock. Such adjustment shall be made successively whenever any
event listed above shall occur, and shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification. If
after an adjustment a Holder of a Warrant upon exercise of such Warrant may
receive shares of two or more classes of capital stock of the Company, the Board
of Directors of the Company shall determine in the good faith exercise of its
reasonable business judgment the allocation of the adjusted Exercise Price
between the classes of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class of capital stock shall thereafter
be subject to adjustment on terms comparable to those in this Section 15.
----------
(b) Adjustment for Common Stock Issues. If the Company issues shares
----------------------------------
of Common Stock for a consideration per share less than the Fair Market Value
per Share on the date the Company fixes the offering price of such additional
shares, the Exercise Price shall be adjusted in accordance with the following
formula:
P
-
E' = E x (O + M)
-----
A
-28-
<PAGE>
where: E' = the adjusted Exercise Price;
E = the then current Exercise Price;
O = the number of shares of Common Stock outstanding
immediately prior to the issuance of such additional
shares;
P = the aggregate consideration received for the issuance of
such additional shares; and
M = the Fair Market Value per Share on the date the Company
fixes the offering price of such additional shares; and
A = the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance is made,
and shall become effective immediately after such issuance. The provisions of
this subsection (b) do not apply (i) to of the transactions described in
subsection (a) of this Section 15 or (ii) any transaction for which an
----------
adjustment has been made pursuant to the provisions of subsections (c) or (d) of
this Section 15, or (iii) the issuance of any Excluded Shares..
----------
(c) Adjustment for Convertible Securities Issues. If the Company
--------------------------------------------
issues any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable, with or without payment of additional
consideration in cash or property, for shares of Stock, either immediately or
upon the occurrence of a specified date or a specified event ("Convertible
-----------
Securities"), other than shares of Class A Common Stock issued pursuant to the
- ----------
Warrants and Convertible Securities for which an adjustment has been made
pursuant to the provisions of subsection (d) of this Section 15, whether or not
---------------
the right to convert or exchange thereunder is immediately exercisable or is
conditioned upon the passage of time, the occurrence or non-occurrence of some
other event, or both, for a consideration per share of Stock initially
deliverable upon conversion or exchange of such Convertible Securities less than
the Fair Market Value per Share on the date of issuance of such Convertible
Securities, the Exercise Price shall be adjusted in accordance with this
formula:
P
-
E' = E x O + M
-----
O + D
where: E' = the adjusted Exercise Price;
E = the then current Exercise Price;
-29-
<PAGE>
O = the number of shares of Common Stock outstanding
immediately prior to the issuance of such Convertible
Securities;
P = the aggregate consideration received for the issuance of
such Convertible Securities; and
M = the Fair Market Value per Share on the date of issuance of
such Convertible Securities; and
D = the maximum number of shares of Common Stock deliverable
upon exercise, conversion or in exchange of such
Convertible Securities at the Minimum Price.
In this subsection (c), the term "Minimum Price" means the lowest price at which
-------------
the Convertible Securities can be converted into or exchanged for Common Stock,
regardless of whether that is the initial rate or is conditioned upon the
passage of time, the occurrence or non-occurrence of some other event, or both.
The adjustment shall be made successively whenever any such issuance is made,
and shall become effective immediately after such issuance. If all of the Stock
deliverable upon conversion or exchange of such Convertible Securities has not
been issued when such Convertible Securities are no longer outstanding, then the
Exercise Price shall promptly be readjusted to the Exercise Price which would
then be in effect had the adjustment upon the issuance of such Convertible
Securities been made on the basis of the actual number of shares of Stock issued
upon conversion or exchange of such Convertible Securities.
(d) Adjustment for Right, Option and Warrant Issues. If the Company
-----------------------------------------------
issues any rights, options or warrants to subscribe for or purchase or otherwise
acquire Stock, whether or not the right to exercise such rights, options or
warrants is immediately exercisable or is conditioned upon the passage of time,
the occurrence or non-occurrence of some other event, or both (the "Option
------
Securities"), for a consideration per share of Stock initially deliverable upon
- ----------
exercise of such Option Securities less than the Fair Market Value per Share on
the date of issuance of such Option Securities, the Exercise Price shall be
adjusted in accordance with this formula:
P
-
E' = E x O + M
-----
O + D
where: E' = the adjusted Exercise Price;
E = the then current Exercise Price;
-30-
<PAGE>
O = the number of shares of Common Stock outstanding
immediately prior to the issuance of such Option
Securities;
P = the aggregate consideration received for the issuance of
such Option Securities;
M = the Fair Market Value per Share on the date of issuance of
such Option Securities; and
D = the maximum number of shares of Common Stock deliverable
upon exercise, conversion or in exchange of such Option
Securities at the Minimum Price.
As used in this subsection (d), the term "Minimum Price" means the lowest price
-------------
at which the Option Securities may be exercised to purchase or otherwise acquire
Common Stock, regardless of whether that is the initial price or is conditioned
upon the passage of time, the occurrence or non-occurrence of some other event,
or both. The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance. If all of the
Common Stock deliverable upon exercise of such Option Securities has not been
issued when such Option Securities are no longer outstanding, then the Exercise
Price shall promptly be readjusted to the Exercise Price which would then be in
effect had the adjustment upon the issuance of such Option Securities been made
on the basis of the actual number of shares of Common Stock issued upon such
exercise of such Option Securities.
(e) Consideration Received. For purposes of any computation
----------------------
respecting consideration received pursuant to any subsection of this Section 15,
----------
the following shall apply:
(i) in the case of the issuance of shares of Common Stock for cash, the
consideration received shall be the amount of cash received by the Company
therefor, without deduction therefrom of any reasonable expenses incurred by the
Company in connection therewith or any reasonable underwriters' discounts, fees
and commissions paid or allowed by the Company in connection therewith.
(ii) in the case of the issuance of shares of Common Stock for a
consideration consisting in whole or in part of other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof as determined by the Board of Directors of the Company in the good faith
exercise of its business judgment, without deduction therefrom of any reasonable
expenses incurred by the Company in connection therewith. In any circumstances
in which the fair market value of any such consideration is to be determined
pursuant to this paragraph (ii), the Company shall give to the Holders (or, if
such determination affects less than all of the Holders, to the Holders so
affected) written notice of the proposed fair market value, as determined in
good faith by the Board of Directors of the
-31-
<PAGE>
Company. If, within thirty (30) days after the date such notice is given, the
Company and such Holders agree upon the fair market value then the fair market
value for purposes of this paragraph (ii) shall be as so agreed. If such Holders
and the Company do not agree upon such fair market value within such 30-day
period, then the Required Holders and the Company shall appoint a recognized
investment banking firm of national reputation, reasonably acceptable to the
Required Holders and the Company. If the Company and the Required Holders cannot
agree on the appointment of a mutually acceptable investment banking firm, or if
the firm so appointed declines or fails to serve, then the Required Holders and
the Company shall each choose one such investment banking firm and the
respective firms so chosen shall appoint another recognized investment banking
firm of national reputation. The investment banking firm so selected shall
appraise the fair market value for the purposes of this paragraph (ii), and such
investment banking firm shall make such appraisal (which shall be in the form of
a written report signed by such investment banking firm) and, for the purposes
of determining the fair market value pursuant to this paragraph (ii), such
appraised fair market value determined as herein provided shall be final and
conclusive on the Company and the Holders. If the appraised value of the Company
as determined by such investment banking firm is equal to or less than that
determined by the Board of Directors of the Company in accordance with this
paragraph (ii), then all fees and expenses of such investment banking firm shall
be paid by the Required Holders requesting such appraisal. If the appraised
value of the Company as determined by such investment banking firm is greater
than that determined by the Board of Directors in accordance with this paragraph
(ii), then all fees and expenses of such investment banking firm shall be paid
by the Company.
(iii) in the case of the issuance of Convertible Securities or securities
issuable upon the exercise of Option Securities, the aggregate consideration
received therefor shall be deemed to be the consideration received by the
Company for the issuance of such Convertible Securities, plus the consideration,
if any, received by the Company for the issuance of such Option Securities, plus
the additional minimum consideration, if any, to be received by the Company upon
the conversion, exchange or exercise thereof (the consideration in each case to
be determined in the same manner as provided in clauses (i) and (ii) of this
subsection (e)).
(f) Special Adjustments. If the purchase price provided for in any
-------------------
Option Securities, the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities or the rate at which any
Convertible Securities are convertible into or exchangeable for Stock shall
change, the Exercise Price or number of Warrant Shares purchasable upon the
exercise of the Warrants in effect at the time of such event shall forthwith be
readjusted. The Exercise Price or number of Warrant Shares purchasable upon the
exercise of the Warrants shall be adjusted to those amounts which would have
been in effect at such time had such Option Securities or Convertible Securities
outstanding at such time initially been granted, issued or sold and the Exercise
Price or number of Warrant Shares purchasable upon the exercise of the Warrants
initially adjusted as provided in the applicable subsection of this Section 15,
----------
whichever was applicable, except that the minimum amount of
-32-
<PAGE>
additional consideration payable and the total maximum number of shares issuable
shall be determined after giving effect to such event (and any prior event or
events).
(g) When No Adjustment Required. No adjustment need be made for a
---------------------------
change in the par value or absence of par value of any Common Stock. No
adjustment in the Exercise Price need be made unless adjustment would require an
increase or decrease of at least 1% of the Exercise Price. Any adjustments that
are not made but deferred pursuant to this subsection shall be carried forward
and taken into account in any subsequent adjustment.
(h) Determination of Fair Market Value per Share; Notice of
--------------------------------------------------------
Adjustment. Prior to issuing any shares of Common Stock, any Convertible
- ----------
Securities or any Option Securities, the Company shall cause the Board of
Directors of the Company to determine in good faith the Fair Market Value per
Share, as of the date on which the Company fixes the offering price of such
shares or as of the date of issuance of such Convertible Securities or Option
Securities, as the case may be. Within five (5) days of such determination by
the Board of Directors of the Company, but in no event later than thirty (30)
days prior to issuance of such Common Stock, Convertible Securities or Option
Securities, the Company shall give the Holders written notice of the proposed
Fair Market Value per Share. If within such thirty (30) day period, the Company
and such Holders agree upon the Fair Market Value per Share, then the Fair
Market Value per Share shall be as so agreed. If, within such 30-day period, the
Company and the Required Holders do not agree upon such Fair Market Value per
Share, then the Fair Market Value per Share shall be determined as provided in
clause (b) of the definition thereof.
(j) Reorganization of the Company. In the event of any capital
-----------------------------
reorganization, recapitalization or reclassification of the capital stock of the
Company, or consolidation, merger or amalgamation of the Company with another
entity, any acquisition of capital stock of the Company by means of a share
exchange, or the sale, lease, transfer, conveyance or other disposition of all
or substantially all of its assets to another entity, then, as a condition of
such reorganization, recapitalization, reclassification, consolidation, merger,
amalgamation, share exchange or sale, lease, transfer, conveyance or other
disposition, lawful and adequate provision shall be made whereby the Holders of
the Warrant Certificates shall thereafter have the right to purchase and
receive, on the basis and upon the terms and conditions specified in this
Agreement and in lieu of the Warrant Shares immediately theretofore purchasable
and receivable upon the exercise of the rights represented by the Warrants, such
shares of stock, securities, cash or property as may be issued or payable with
respect to or in exchange for the number of Warrant Shares immediately
theretofore purchasable and receivable upon the exercise of the rights
represented by the Warrant Certificates had such reorganization,
recapitalization, reclassification, consolidation, merger, amalgamation, share
exchange or sale, lease, transfer, conveyance or other disposition not taken
place. If such consolidation, merger, amalgamation, share exchange, sale, lease,
transfer, conveyance or other disposition is with any Person or group of Persons
(within the
-33-
<PAGE>
meaning of Section 13(d) or 14(d) of the Exchange Act) who shall have made a
purchase, tender or exchange offer which was accepted by the holders of not less
than twenty percent (20%) of the outstanding shares of Common Stock of the
Company, the Holders of the Warrants shall have been given a reasonable
opportunity (and, in no event, less than 30 days) to elect to receive, either
(x) the stock, securities, cash or property it would have received pursuant to
the immediately preceding sentence or (y) the stock, securities, cash or
property issued or paid (or to be issued or paid) to holders of the Common Stock
in accordance with such offer. In any such case appropriate provision shall be
made with respect to the rights and interests of the Holders of the Warrants to
the end that the provisions of this Agreement (including, without limitation,
provisions for adjustment of the Exercise Price and of the number and type of
securities purchasable upon the exercise of the Warrants) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities,
cash or property thereafter deliverable upon the exercise of the Warrants. The
Company shall not effect any such consolidation, merger, amalgamation, share
exchange or sale, lease, transfer, conveyance or other disposition unless prior
to or simultaneously with the consummation thereof the successor entity (if
other than the Company) resulting from such consolidation, merger or
amalgamation, share exchange or the entity purchasing or otherwise acquiring
such assets or shares (i) shall assume by a supplemental Warrant Agreement,
satisfactory in form, scope and substance to the Required Holders (which shall
be mailed or delivered to the registered Holders of the Warrants at the last
address of such Holders appearing on the books of the Company) the obligation to
deliver to such Holders such shares of stock, securities, cash or property as,
in accordance with the foregoing provisions, such Holders may be entitled to
purchase (the "Substitute Securities") and (ii) shall assume all of the
---------------------
obligations of the Company set forth in this Agreement and the Registration
Rights Agreement. Following such assumption such obligations shall apply to the
Substitute Securities rather than to the Warrant Shares. If the issuer of
securities deliverable upon exercise of Warrants under the supplemental Warrant
Agreement is an Affiliate of the formed, surviving, transferee or lessee entity,
such issuer shall join the supplemental Warrant Agreement. The foregoing
provisions of this paragraph shall similarly apply to successive
reorganizations, recapitalizations, reclassifications, consolidations, mergers,
amalgamations, share exchanges, sales, leases, transfers, conveyances or other
dispositions. The provisions of this subsection (i) of Section 15 shall not
----------
apply to the Merger to the extent the Merger complies with subsection (j) of
Section 15.
- -----------
(j) The Merger. Upon consummation of the Merger, (1) the Warrant
----------
Documents and all obligations of Brunswick under the Warrant Documents shall
automatically become the legal, valid and binding obligations of STI,
enforceable against STI in accordance with their terms, as if STI had been the
signatory thereto, (2) each Series A Warrant shall be exercisable for a number
of shares of Class A Common Stock of STI equal to (i) the number of shares of
Class A Common Stock of Brunswick for which such Series A Warrant is exercisable
as of the Merger Consummation Date, multiplied by (ii) the Conversion Factor,
-------------
for an Exercise Price equal to $.10 per share multiplied by the Conversion
Factor, and (3)
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<PAGE>
each Series B Warrant shall be exercisable for a number of shares Class A Common
Stock of STI equal to (i) the number of shares of Class A Common Stock of
Brunswick for which such Series B Warrant is exercisable as of the Merger
Consummation Date, multiplied by (ii) the Conversion Factor, for an Exercise
-------------
Price equal to the Exercise Price immediately prior to consummation of the
Merger divided by the Conversion Factor. Brunswick acknowledges and agrees that
------- --
it is a condition to the Merger that STI execute and deliver to the Purchaser,
prior to or concurrently with the consummation of the Merger, (1) an assumption
agreement, in form and substance reasonably satisfactory to the Required
Holders, pursuant to which STI shall expressly assume and reaffirm its
obligations under the Warrant Documents, (2) substitute Series A Warrant
Certificates and Series B Warrant Certificates evidencing warrants for the
number of shares of Class A Common Stock of STI set forth in the preceding
sentence and reflecting the Exercise Prices for the Series A Warrants and Series
B Warrants effective upon and after the Merger Consummation Date, and (3) an
opinion of counsel to STI in the form of Exhibit F.
---------
(k) When Issuance or Payment May Be Deferred. In any case in which
----------------------------------------
this Section 15 shall require that an adjustment in the Exercise Price be made
----------
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event (i) issuing to the Holder of any
Warrant exercised after such record date the Warrant Shares issuable upon such
exercise over and above the Warrant Shares issuable upon such exercise on the
basis of the Exercise Price prior to such adjustment and (ii) paying to such
Holder any amount in cash in lieu of a fractional share pursuant to Section 16;
----------
provided, however, that the Company shall deliver to such Holder a bill or other
- -------- -------
appropriate instrument evidencing such Holder's right to receive such additional
Warrant Shares and cash upon the occurrence of the event requiring such
adjustment.
(l) Adjustment in Number of Shares. Upon each adjustment of the
------------------------------
Exercise Price pursuant to this Section 15, each Warrant outstanding prior to
----------
the making of the adjustment in the Exercise Price shall thereafter evidence the
right to receive upon payment of the adjusted Exercise Price that number of
Warrant Shares (calculated to the nearest hundredth) obtained from the following
formula:
N'= N x E
-
E'
where: N' = the adjusted number of Warrant Shares issuable upon
exercise of a Warrant by payment of the adjusted Exercise
Price ;
N = the number or Warrant Shares previously issuable upon
exercise of a Warrant by payment of the Exercise Price prior
to adjustment;
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<PAGE>
E' = the adjusted Exercise Price; and
E = the Exercise Price prior to adjustment.
Anything in this subsection (l) or elsewhere in this Agreement to the contrary
notwithstanding, if because of any limitations set forth in subsection (g) of
this Section 15, no adjustment in the Exercise Price is made, the provisions of
----------
this subsection (l) shall nevertheless be given effect so as to increase or
decrease the adjusted number of Warrant Shares as though E' in the above formula
had actually been adjusted.
SECTION 16. Fractional Interests. The Company shall not be required
--------------------
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon exercise
thereof shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of the
Warrant Shares would, except for the provisions of this Section 16, be issuable
----------
on the exercise of any Warrants (or specified portion thereof), the Company
shall pay an amount in cash equal to the Fair Market Value per Share on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction.
SECTION 17. Notice to Warrant Holders. Upon any adjustment of the
-------------------------
Exercise Price or number or type of securities purchasable upon exercise of the
Warrants pursuant to Section 15, and as otherwise required by Section 15, the
---------- ----------
Company shall promptly thereafter (i) upon the request of the Required Holders,
cause to be filed with the Company a certificate of the chief financial officer
of the Company setting forth the Exercise Price and the number and type of
securities or other property constituting Warrant Shares after such adjustment
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculations are based and, in the case of an adjustment
pursuant to Section 15(i) or (j), setting forth the number and type of
------------- ---
securities or other property constituting Warrant Shares (or portion thereof)
issuable, after such adjustment in the Exercise Price or number of Warrant
Shares purchasable upon exercise of the Warrants, upon exercise of a Warrant and
payment of the adjusted Exercise Price, and (ii) cause to be given to each of
the Holders of the Warrant Certificates written notice of such adjustments,
together with a copy of such certificate. Where appropriate, such notice may be
given in advance and included as a part of the notice required to be given under
the other provisions of this Section 17. In the event:
----------
(a) the Company shall authorize the issuance to holders (although not
necessarily to all such holders) of shares of Stock or rights, options or
warrants to subscribe for or purchase or otherwise acquire shares of Stock or of
any other securities or property (including securities of any other issuer) or
of any other subscription rights, options or warrants; or
-36-
<PAGE>
(b) the Company shall authorize the payment of any dividend or
distribution to holders of shares of Stock of cash, Stock or other securities or
property (including securities of any other issuer) of the Company; or
(c) of any capital reorganization, reclassification or
recapitalization of the capital stock of the Company, or any amalgamation,
consolidation or merger to which the Company is a party, or any acquisition of
capital stock of the Company through a share exchange, or of the sale, lease,
conveyance, transfer or other disposition of the properties and assets of the
Company substantially as an entirety, or a purchase, tender or exchange offer
for shares of Common Stock or other securities constituting part of the Warrant
Shares (whether by the Company or some other party); or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action which would require an
adjustment of the Exercise Price or number of Warrant Shares purchasable upon
exercise of the Warrants pursuant to Section 15;
----------
then the Company shall cause to be given to each of the Holders, at least 20
days prior to the applicable record date hereinafter specified (or promptly in
the case of events for which there is no record date), a written notice stating
(as applicable) (i) the date as of which the holders of record of shares of
Stock entitled to receive any such rights, options, warrants or dividends or
distribution are to be determined, (ii) the date on which any such
reclassification, recapitalization or reorganization, consolidation, merger,
amalgamation, share exchange, sale, lease, conveyance, transfer, disposition,
dissolution, liquidation or winding up is expected to become effective or be
consummated, or (iii) the initial expiration date set forth in any purchase,
tender or exchange offer for shares of Stock, and the date as of which it is
expected that holders of record of shares of Stock or other securities
constituting a part of the Warrant Shares (or securities into which the Warrant
Shares may be converted) shall be entitled to exchange such shares or securities
for securities or other property, if any, deliverable upon such
reclassification, recapitalization, reorganization, consolidation, merger,
amalgamation, share exchange, sale, lease, conveyance, transfer, disposition,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 17 or any defect therein shall not affect the legality or
----------
validity of any distribution, right, option, warrant, reorganization,
recapitalization, reclassification, consolidation, merger, amalgamation, share
exchange, sale, lease, conveyance, transfer, disposition, dissolution,
liquidation or winding up, or the vote upon any action. Nothing contained in
this Agreement or in any of the Warrant Certificates shall be construed as
conferring upon the Holders the right to vote or to consent as stockholders in
respect of the meetings of stockholders or the election of members of the Board
of Directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company.
-37-
<PAGE>
SECTION 18. Cash Distributions and Dividends. If the Company pays a
--------------------------------
dividend or makes a distribution to the holders of its Stock of any securities
(other than Stock) or property (including cash and securities of other
companies) of the Company, or any rights, options or warrants to purchase
securities (other than Stock) or property (including securities of other
companies) of the Company, then, simultaneously with the payment of such
dividend or the making of such distribution, and as a condition precedent to its
right to do so, it will pay or distribute to the Holders of Series A Warrant
Certificates an amount of property (including without limitation cash) and/or
securities (including without limitation securities of other companies) of the
Company as would have been received by such Holders had they exercised all of
the Series A Warrants represented by the Series A Warrant Certificates
immediately prior to the record date (or other applicable date) used for
determining stockholders of the Company entitled to receive such dividend or
distribution. Anything in subsection (d) of Section 15 to the contrary
----------
notwithstanding, no adjustment to the Exercise Price shall be made for any
distribution of Convertible Securities of the Company to the Holders pursuant to
the provisions of this Section 18.
----------
SECTION 19. Put Rights; Tag-Along Rights and Registration Rights.
----------------------------------------------------
(a) Put by Holders. Unless the Required Holders have otherwise agreed in
--------------
writing, at any time and from time to time on or after the occurrence of a Put
Event, the Put Right shall be exercisable by each of the Holders. After receipt
of a Put Notice from any Holder, the Company will promptly (and in any event
within ten (10) days) give written notice (the "Put Exercise Notice") to each of
-------------------
the other Holders of Warrant Securities that a Put Right has been exercised.
Each Holder will have the right to participate in the Put Right and require the
Company to repurchase all or any portion of such Holder's Warrant Securities by
delivering written notice to the Company within ten (10) days following receipt
of the Put Exercise Notice. All such notices delivered by such other Holders
will be deemed to have been delivered as of the date of the initial Put Notice
and taken together will be deemed to be one exercise of the Put Right. Upon the
exercise by a Holder of the Put Right, the purchase price payable to such Holder
(the "Put Purchase Price") by the Company for such Holder's Warrant Securities
------------------
shall be as follows:
(i) in the case of Warrants, an amount determined by subtracting (A) the
aggregate Exercise Price for Series B Warrants then in effect under the Warrant
Agreement from (B) the product of (1) the Contract Value per Share, multiplied
----------
by (2) the number of shares of Voting Common Stock that may be acquired upon the
- --
conversion by such Holder of the shares of Class A Common Stock that would be
received upon exercise of such Holder's Warrants with respect to which the Put
Right is being exercised;
(ii) in the case of Class A Common Stock, an amount equal to the product of
(A) the Contract Value per Share, multiplied by (B) the number of shares of
-------------
Voting Common
-38-
<PAGE>
Stock that may be acquired upon the conversion by such Holder of the shares of
Class A Common Stock with respect to which the Put Right is being exercised; and
(iii) in the case of Voting Common Stock, an amount equal to the product
of (A) the Contract Value per Share, multiplied by (B) the number of shares of
Voting Common Stock with respect to which the Put Right is being exercised.
Promptly upon the receipt of a Put Notice pursuant to Section 19(a) the Company
-------------
shall cause the Contract Value per Share to be determined, and shall give
written notice of the determination thereof to each Holder, promptly upon the
determination thereof and in any event within thirty (30) days following the
Company's receipt of the Put Notice. The provisions of this Section 19(a) shall
-------------
apply until the termination of this Agreement pursuant to Section 24 to any
----------
Person who acquires in any manner any Warrant Securities from any Holder.
(b) Closing. Each closing of the purchase and sale of any Warrant
-------
Securities pursuant to Section 19(a) shall take place on a date (a "Put Closing
------------- -----------
Date") which is the later of (i) thirty (30) days after the giving of the Put
- ----
Notice, and (ii) ten (10) days after determination of the Contract Value per
share, provided that if such day is not a Business Day such closing shall be on
the next succeeding Business Day. Payment of the Put Purchase Price shall be due
and payable in full on the Put Closing Date. The closing of such purchase and
sale of Warrant Securities shall take place at 10:00 a.m. on the Put Closing
Date at such location in Atlanta, Georgia, or New York, New York, as the
Required Holders may reasonably determine and notify the Company or at such
other location as may be agreed to by the Company and the Required Holders. The
Put Purchase Price shall be paid in full at each such closing, by wire transfer
of immediately available federal funds, and the Warrant Securities to be
repurchased at such closing shall be duly endorsed for transfer. Such Warrant
Securities shall be free and clear of all liens and encumbrances of any kind,
nature and description, other than applicable restrictions under federal and
state securities laws, and each Holder shall represent and warrant to the
Company to such effect with respect to such Holder's Warrant Securities. The
Company will pay all stamp and transfer taxes in connection with the repurchase
of the Warrant Securities hereunder.
(c) Restrictions on Purchase. The Company covenants and agrees that, other
------------------------
than the Restrictive Provisions, it shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of the Required Holders,
enter into or agree to become subject to any term, condition, provision or
agreement that would conflict with or restrict in any way the performance of the
Company's obligations under this Agreement or that would by its terms restrict
the availability of Legally Available Funds with which to perform such
obligations. Anything in this Agreement to the contrary notwithstanding, the
Company shall not be required to purchase Warrant Securities under Section 19(a)
-------------
if at the time of closing of the purchase and sale of any Warrant Securities
pursuant to Section 19(a) there exists any Restrictions on
-------------
-39-
<PAGE>
Purchase. Upon receipt of a Put Notice, if the Company's obligations under
Section 19(a) at the time of performance would be subject to Restrictions on
- -------------
Purchase, then the Company (i) shall promptly use all reasonable efforts
(excluding the payment of waiver, consent or similar transactional fees, but
including reasonable documentation costs and other similar expenses) to cause
the Required Lenders to waive compliance with any such Restrictive Provisions
and/or to amend the Restrictive Provisions so as to permit the purchase of the
Warrant Securities pursuant to this Agreement, (ii) shall not repay, redeem,
purchase or otherwise retire any indebtedness for borrowed money of, or any debt
securities issued by, the Company in an amount or for a price or other
consideration in excess of the principal amount thereof, and (iii) shall not
declare or pay any dividend or distribution on any shares of Stock (other than
dividends that accrue and cumulate on Preferred Stock in accordance with the
terms of such Preferred Stock as is in effect on the date such Put Notice is
received by the Company). If, notwithstanding the Company's reasonable efforts
required under this Section 19(c), the Company is unable to fulfill its
-------------
obligations under Section 19(a) because of the existence of one or more
-------------
Restrictions on Purchase, the Company shall give prompt written notice thereof
to each Holder exercising Put Rights, specifying in reasonable detail the nature
thereof and the extent, if any, to which the Company would be able to fulfill
its obligation to pay the Purchase Price within the Restrictions on Purchase. If
any Restrictions on Purchase exist on the proposed Put Closing Date, then at the
sole and independent election of each such Holder, and pursuant to written
notice given by any such Holder to the Company: (i) such Holder's Put Right
shall remain exercised and the closing of the purchase and sale of Warrant
Securities pursuant to such Holder's Put Right shall be deferred until not more
than five Business Days after all such Restrictions on Purchase cease to exist;
provided, however, that, as and to the extent that such Restrictions on Purchase
- -------- -------
cease to exist, the Company shall promptly make partial payments of the Purchase
Price to such Holder, in which case there shall be a series of such closings,
each of which shall take place not more than five Business Days after such
Restrictions on Purchase have ceased to exist to an extent that would permit
such partial payments of the Purchase Price in increments of not less than
$100,000 ("Partially Available Funds"); or (ii) the exercise of such Holder's
-------------------------
Put Right shall be rescinded and such Holder shall reserve its right to exercise
the Put Right at any subsequent time. In the event that any Holders make the
election provided in clause (i) of the immediately preceding sentence, the
Company shall purchase from such selling Holders that number of Warrant
Securities as may be purchased at the Purchase Price using that portion of
Partially Available Funds for such purchase as equals the product of (a) all
Partially Available Funds, and (b) the ratio of (i) the Warrant Securities
originally proposed to be sold by such Holders electing to sell and not electing
to rescind pursuant to clause (ii) of the immediately preceding sentence, to
(ii) the Warrant Securities originally proposed to be sold by all Holders
(treating all Warrants as fully exercised for the Warrant Shares to which the
Holders would be entitled upon exercise of such Warrants). Such purchase shall
be made from each selling Holder pro rata based on the ratio of (i) the number
of Warrant Securities originally proposed to be sold by such Holder to (ii) the
Warrant Securities originally proposed to be sold by all Holders. None of the
provisions of this Section 19(c) shall be construed to limit any other right or
-------------
-40-
<PAGE>
remedy under applicable law which any Holder may have as a result of the failure
by the Company to purchase Warrant Securities as herein provided.
(d) Tag-Along Rights. Without limitation to the right of any Holder to
----------------
exercise its Put Right pursuant to Section 19(a), if at any time the Company
------------
shall determine to enter into any transaction or series of transactions that
would result in a Change of Control (a "Change of Control Transaction") (any
-----------------------------
third party proposing to enter into such transaction or transactions being
hereinafter referred to in this Section 19(d) as a "Prospective Purchaser"), the
------------- ---------------------
Company and any Prospective Purchaser shall first give written notice (the
"Offer Notice") to all of the Holders, specifying the name and address of the
------------
Prospective Purchaser and the number of shares, if any, of Stock proposed to be
issued, sold, transferred or otherwise disposed of and setting forth in
reasonable detail the price, structure and other terms and conditions of the
Change of Control Transaction. The Offer Notice shall represent the offer (the
"Offer") from the Prospective Purchaser to each of the Holders of the right to
-----
sell to the Prospective Purchaser as a condition to the consummation of the
proposed transaction described in the Offer Notice, all Warrant Securities then
owned by each Holder to the Prospective Purchaser and, at the option of the
Holders, on the same terms and conditions (including price and form of
consideration) as are being offered by the Prospective Purchaser to the Company
or at the Fair Market Value per Share, determined as of the date of the Offer
Notice, minus the Exercise Price (if any). Each Holder shall have thirty (30)
days from the date of receipt of the Offer Notice to give written notice of its
intention to accept or reject the Offer. Failure to respond within such thirty-
day period shall be deemed notice of rejection. In the event that any Holder
gives written notice to the Company and the Prospective Purchaser of its
intention to accept such Offer, then such written notice, taken in conjunction
with the Offer Notice, shall constitute a valid and legally binding agreement,
and each of the Holders so giving such written notice shall be entitled to sell
to the Prospective Purchaser, contemporaneously with the consummation of the
Change of Control Transaction, all of the Warrant Securities at the price
specified therefor by such Holder in accordance with this Section 19(d). In the
-------------
event that all of the Holders reject or are deemed to have rejected the offer
represented by the Offer Notice, the Company shall be free to proceed to
consummate such Change of Control Transaction on the terms and conditions set
forth in the Offer Notice, provided that such sale is not otherwise prohibited
by any agreement between the Company and the Purchaser. In the event the Company
fails to complete the proposed sale, transfer or other disposition within ninety
(90) days after the Holder or Holders rejected or were deemed to have rejected
the Offer, such transaction or transactions shall again be subject to the
provisions of this Section 19(d). The provisions of this Section 19(d) shall
------------- -------------
apply until the termination of this Agreement pursuant to Section 24 to any
----------
Person who acquires in any manner any Warrant Securities from any Holder.
(e) Limitation on Put Rights of Others. The Company covenants and agrees
----------------------------------
that, neither the Company nor any of its Subsidiaries shall, directly or
indirectly, grant to any Person or agree to or otherwise become obligated in
respect of any rights to require the
-41-
<PAGE>
Company or any of its Subsidiaries to purchase securities of the Company upon
the demand of any Person. The Company represents and warrants that neither it
nor any of its Subsidiaries has previously entered into any agreement granting
any such rights to any Person, except for such rights as are granted pursuant to
the Preferred Stock Purchase Agreement between Brunswick and the State of
Maryland relating to the Series D Preferred Stock of Brunswick.
(f) Severability. If any provision of this Agreement shall be held or
------------
deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflict of any provision with any
constitution, statute, rule or public policy, or for any other reason, such
circumstances shall not have the effect of rendering the provision or provisions
in question, invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute, rule or public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid,
inoperative or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case.
SECTION 20. Notices. All notices, consents, approvals, agreements
-------
and other communications provided hereunder shall be in writing or by telecopy
and shall be sufficiently given to the Purchaser, the Holders and the Company if
addressed or delivered to them at the following addresses:
If to the Purchaser: ING Capital
135 East 57th Street
New York, New York 10022
Attention: Chief Credit Officer
Telecopier No.: (212) 750-8935
with copies to: ING Capital
Atlanta Office
200 Galleria Parkway
Suite 950
Atlanta, Georgia 30339
Telecopier No.: (770) 951-1005
and a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Hector E. Llorens, Jr., Esq.
-42-
<PAGE>
Telecopier No.: (404) 572-5100
If to any other At its last known address appearing
Holder: on the books of the Company maintained for
such purpose
If to the Company Brunswick Biomedical Corporation
prior to the Merger 6 Thatcher Lane
Consummation Wareham, Massachusetts 01752
Date: Attention: James H. Miller
Telecopier No.: (508) 460-7702
with a copy to: Palmer & Dodge
One Beacon Street
Boston, Massachusetts 02108
Attention: Stanley Keller, Esq.
Telecopier No.: (617) 227-4420
If to the Company Survival Technology, Inc.
on or after the 2275 Research Boulevard, Suite 100
Merger Consumma- Rockville, Maryland 20830
tion Date: Attention: James H. Miller
Telecopier No.: (301) 926-6423
with a copy to: Palmer & Dodge
One Beacon Street
Boston, Massachusetts 02108
Attention: Stanley Keller, Esq.
Telecopier No.: (617) 227-6420
or at such other address as any party may designate to any other party by
written notice. All such notices and communications shall be deemed to have been
duly given: (i) at the time delivered by hand, if personally delivered, (ii)
when received, if deposited in the mail, postage prepaid, (iii) when
transmission is verified, if telecopied, and (iv) on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.
SECTION 21. Costs and Expenses. The Company agrees to pay all
------------------
reasonable out-of-pocket expenses of the Purchaser (including reasonable fees
and expenses of counsel retained by the Purchaser from time to time) in
connection with (i) the negotiation, preparation, execution, and delivery of
this Agreement and each other Warrant Document, whether or not the transactions
contemplated hereby are consummated, and (ii) the consideration of legal
questions relevant hereto and thereto. The Company also agrees to reimburse the
Purchaser and each Holder upon demand for all reasonable out-of-pocket
-43-
<PAGE>
expenses (including reasonable attorneys' fees and expenses) incurred by the
Purchaser or such Holder in enforcing the obligations of the Company under this
Agreement or any other Warrant Document or in connection with any amendment,
waiver, consent, supplement or other modification to this Agreement or any
Warrant Document.
SECTION 22. Indemnification. (a) In consideration of the
---------------
transactions contemplated by this Agreement and the other Warrant Documents, the
Company hereby agrees to indemnify, exonerate and hold the Purchaser and each
Holder, each of their respective successors and assigns, each of the respective
officers, directors, employees, attorneys and agents of the Purchaser and each
Holder and each of their respective successors and assigns (collectively, the
"Indemnified Parties") free and harmless from and against any and all actions,
-------------------
causes of action, suits, losses, costs, liabilities, damages and expenses
(irrespective of whether such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including attorneys' fees and
disbursements (the "Indemnified Liabilities"), incurred by the Indemnified
-----------------------
Parties or any of them or asserted or awarded against the Indemnified Parties or
any of them as a result of, or arising out of, or relating to:
(i) any transaction contemplated by this Agreement or any other Warrant
Document;
(ii) the making of any claim by any investment banking firm, broker or third
party that it is entitled to compensation from any Indemnified Party in
connection with this Agreement;
(iii) any claim, investigation, litigation, or proceeding made or
commenced by a third party related to this Agreement or any other
Warrant Documents, whether or not the Indemnified Party or any other
Indemnified Party is party thereto;
(iv) the breach by the Company of any representation or warranty set
forth in this Agreement or in any other Warrant Document; or
(v) the failure of the Company to comply with all terms, conditions, and
covenants set forth in this Agreement or in any other Warrant
Document;
except for any such Indemnified Liabilities arising for the account of a
- ------ ---
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct as determined by a final and nonappealable
decision of a court of competent jurisdiction. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. The
foregoing indemnity shall become effective immediately upon the execution and
delivery hereof and shall remain operative and in full force and effect
notwithstanding the consummation of
-44-
<PAGE>
the transactions contemplated hereunder, the issuance or exercise of the
Warrants hereunder, the termination of this Agreement pursuant to Section 24,
------- --
the invalidity or unenforceability of any term or provision of this Agreement or
any other Warrant Document, or any investigation made by or on behalf of any
Holder or the Purchaser.
(b) Promptly after receipt by an Indemnified Party of notice of the
commencement of any action (including any governmental investigation or
inquiry), such Indemnified Party will, if such Indemnified Party intends to make
a claim in respect thereof against the Company, give written notice to the
Company of the commencement thereof, but the omission so to notify the Company
shall not relieve the Company from any of its obligations hereunder. In case any
such action is brought against any Indemnified Party and it notifies the Company
of the commencement thereof, the Company shall be entitled to participate in and
to the extent that it may wish, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party, and after notice from the
Company to such Indemnified Party, the Company shall not be responsible for any
legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof. The Company will not consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.
SECTION 23. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Holders shall bind and
inure to the benefit of their respective successors and assigns, including those
by operation of law, merger, consolidation or as otherwise provided in
subsection (i) or (j) of Section 15.
------- --
SECTION 24. Termination. Except as otherwise provided herein, this
-----------
Agreement shall terminate when (a) all Warrants have expired unexercised in
accordance with their terms or all Warrant Securities have been purchased
pursuant to Section 19 hereof, and (b) all obligations of the Company and the
------- --
Borrower (or any successor to either of them) shall have been satisfied in full
and all contingencies in respect thereof shall no longer exist, including,
without limitation, the obligations set forth in subsection (i) or (j) of
Section 15.
- ------- --
SECTION 25. Governing Law. THIS AGREEMENT AND THE WARRANTS SHALL BE
--------- ---
GOVERNED BY THOSE PROVISIONS OF THE CORPORATE CODE OF THE JURISDICTION IN WHICH
THE COMPANY IS INCORPORATED AND ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF THE
JURISDICTION IN WHICH THE COMPANY IS INCORPORATED WHICH ARE NECESSARILY
APPLICABLE TO SECURITIES ISSUED BY A CORPORATION INCORPORATED IN SUCH
JURISDICTION AND OTHERWISE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS
OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF SAID STATE.
-45-
<PAGE>
SECTION 26. Benefits of this Agreement. Nothing in this Agreement
-------- -- ---- ---------
shall be construed to give to any Person other than the Company and the Holders
any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company and the
Holders.
SECTION 27. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.
SECTION 28. Amendments; Waiver. No provision of this Agreement may
---------- ------
be amended or waived except by an instrument in writing signed by the party
sought to be bound; provided, however, that any amendment requested or waiver
-------- ------
sought from the Holders of any provision of this Agreement which affects Holders
generally may be given by the Required Holders and any waiver so given shall be
binding on all Holders; provided further, that the provisions of Section 11 with
-------- ------- ----------
respect to the type of securities for which the Warrants are exercisable may not
be changed without the consent of each Holder affected thereby. No failure or
delay by any party in exercising any right or remedy hereunder shall operate as
a waiver thereof, nor shall a waiver of a particular right or remedy on one
occasion be deemed a waiver of any other right or remedy or a waiver of the same
right or remedy on any subsequent occasion.
SECTION 29. Waiver of Jury Trial. THE PURCHASER, EACH HOLDER AND THE
------ -- ---- -----
COMPANY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ON THE
WARRANTS OR ON ANY OF THE OTHER WARRANT DOCUMENTS, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH, THIS AGREEMENT, THE WARRANTS OR ANY OF THE OTHER WARRANT
DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE PURCHASER, ANY HOLDER OR THE COMPANY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER'S ENTERING INTO THIS
AGREEMENT.
SECTION 30. Jurisdiction. The Company hereby agrees that any legal
------------
action or proceeding against it with respect to this Agreement, the Warrants or
any of the other Warrant Documents may be brought in the courts of the State of
New York or of the United States of America for the Southern District of New
York as any Holder may elect, and, by execution and delivery hereof, it accepts
and consents for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts and agrees that such
jurisdiction shall be exclusive, unless waived by the Required Holders in
writing, with respect to any action or proceeding brought by it against such
Holders. The Company hereby irrevocably designates, appoints and empowers CT
Corporation System whose present address is 1633 Broadway, New York, New York
10019, as its authorized agent to receive, for and
-46-
<PAGE>
on its behalf and its property, service of process in the State of New York when
and as legal actions or proceedings may be brought in the courts of the State of
New York or of the United States of America sitting in New York, and such
service of process shall be deemed complete upon the date of delivery thereof to
such agent, or upon the earliest of any other date permitted by applicable law.
It is understood that a copy of said process served on such agent will be
forwarded to the Company as soon as practicable, at its address set forth
herein, but its failure to receive such copy shall not affect in any way the
service of said process on said agent as the agent of the Company. The Company
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of the copies thereof by
certified mail, return receipt requested, postage prepaid, to it at its address
set forth herein, such service to become effective upon the earlier of (I) the
date 10 calendar days after such mailing and (ii) any earlier date permitted by
applicable law. The Company agrees that it will at all times continuously
maintain an agent to receive service of process in the State of New York on
behalf of itself and its properties and in the event that, for any reason, the
agent named above or its successor shall no longer serve as its agent to receive
service of process in the State of New York on its behalf, it shall promptly
appoint a successor so to serve and shall advise the Holders thereof. The
Company agrees that Sections 5-1401 and 5-1402 of the General Obligations Law of
the State of New York shall apply to this Agreement and each of the other
Warrant Documents and waives any right to stay or to dismiss any action or
proceeding brought before said courts on the basis of forum non conveniens.
----- --- ----------
Nothing herein shall affect the right of any Holder to bring proceedings against
the Company in the courts of any other jurisdiction or to serve process in any
other manner permitted by applicable law.
SECTION 31. Specific Performance. The Company recognizes that the
-------- -----------
rights of the Holders under this Agreement and the other Warrant Documents are
unique and, accordingly, the Holders shall, in addition to such other remedies
as may be available to any of them at law or in equity, have the right to
enforce their rights hereunder and thereunder by actions for injunctive relief
and specific performance to the extent permitted by law. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement or any of the other
Warrant Documents and hereby agrees to waive in any action for specific
performance the defense that a remedy at law would be adequate. This Agreement
is not intended to limit or abridge any rights of the Holders which may exist
apart from this Agreement.
SECTION 32. Confidentiality. The Holders shall hold all non-public,
---------------
proprietary or confidential information (which has been identified as such by
the Company) obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature; provided, however, that each Holder may make disclosure of any
-------- -------
such information to its examiners, Affiliates, outside auditors, counsel,
consultants, appraisers and other professional advisors in connection with this
Agreement or as reasonably required by any proposed transferee in connection
with the
-47-
<PAGE>
contemplated transfer of any Warrant Securities (but only if the proposed
transferee agrees to be bound by the terms of this Section 32) or as required or
------- --
requested by an Governmental Authority or representative thereof or in
connection with the enforcement hereof or of any other Warrant Document or
pursuant to legal process. In no event shall any Holder be obligated or required
to return any materials furnished to it by the Company.
SECTION 33. Entire Agreement. The parties hereto agree that this
------ ---------
Agreement, the Registration Rights Agreement and the Loan Documents constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings between them as to such
subject matter; and there are no restrictions, agreements, arrangements, oral or
written, between any or all of the parties relating to the subject matter hereof
which are not fully expressed or referred to herein or therein.
-48-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BRUNSWICK BIOMEDICAL
CORPORATION
By: /s/ James H. Miller
-- ----- -- ------
Name:
Title:
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
By: /s/ Daren J. Wells
-- ----- -- -----
Name: Daren J. Wells
Title: Managing Director
-49-
<PAGE>
EXHIBIT A
------- -
FORM OF SERIES A WARRANT CERTIFICATE
---- -- ------ - ------- -----------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER) AS
TO AN EXEMPTION, FROM THE REGISTRATION PROVISIONS OF SAID ACT OR LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
WARRANT PURCHASE AGREEMENT, DATED AS OF APRIL 15, 1996, BETWEEN BRUNSWICK
BIOMEDICAL CORPORATION (THE "COMPANY") AND INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION ("ING") AND A REGISTRATION RIGHTS AGREEMENT, DATED AS OF
APRIL 15, 1996, AMONG THE COMPANY AND THE PURCHASERS IDENTIFIED IN EXHIBIT A
ATTACHED THERETO, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE
COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH
SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID.
Certificate No.__ _______ Warrants
Warrant Certificate
BRUNSWICK BIOMEDICAL CORPORATION
This Warrant Certificate certifies that INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION ("ING"), or registered assigns, is the registered
---
holder of the number of Warrants (the "Warrants") set forth above to purchase
--------
shares of non-voting common stock, par value $0.01 per share (the "Class A
----- -
Common Stock"), of BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation
- ------ -----
(the "Company"). Each Warrant entitles the holder upon exercise to receive from
-------
the Company one fully paid and nonassessable share of Class A Common Stock (a
"Warrant Share") at the initial exercise price (the "Exercise Price") of $0.01,
------- ----- -------- -----
payable in lawful money of the United States of America, upon surrender of this
Warrant Certificate and payment of the Exercise Price, if applicable,
-50-
<PAGE>
at the office of the Company designated for such purpose, subject to the
conditions set forth herein and in the Warrant Agreement referenced below. The
Exercise Price and number and type of Warrant Shares issuable upon exercise of
the Warrants are subject to adjustment upon the occurrence of certain events, as
set forth in the Warrant Agreement. Each Warrant also entitles the holder to
convert such Warrant into the number of Warrant Shares determined in accordance
with Section 11(b) of the Warrant Agreement.
------- -----
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Series A Warrants, and are issued or to be issued pursuant
to a Warrant Purchase Agreement dated as of April 15, 1996 (the "Warrant
-------
Agreement"), duly executed and delivered by the Company and ING, which Warrant
- ---------
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights,
obligations and duties hereunder of the Company and the holders of the Warrants
(the words "holders" or "holder" meaning the registered holders or registered
holder). A copy of the Warrant Agreement may be obtained by the holder hereof
upon written request to the Company.
The holder of Warrants evidenced by this Warrant Certificate may
exercise such Warrants under and pursuant to the terms and conditions of the
Warrant Agreement by surrendering this Warrant Certificate, with the form of
election to purchase attached hereto (and by this reference made a part hereof)
properly completed and executed, together with payment of the Exercise Price in
cash at the office of the Company designated for such purpose. In the event that
any exercise of Warrants evidenced hereby shall be for less than the total
number of Warrants evidenced hereby, there shall be issued by the Company to the
holder hereof or his or its registered assignee a new Warrant Certificate
evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Warrant Shares issuable upon the
exercise of each Warrant shall be adjusted. No fractional shares of Warrant
Shares will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The Holders of the Warrants are entitled to certain registration
rights as set forth in a Registration Rights Agreement dated as of April 15,
1996, among the Company and the purchasers identified in Exhibit A attached
thereto (the "Registration Rights Agreement"). By acceptance of this Warrant
Certificate, the Holder hereof agrees that upon exercise of any or all of the
Warrants evidenced hereby, such Holder will be bound by the Registration Rights
Agreement. A copy of the Registration Rights Agreement may be obtained by the
holder hereof upon written request to the Company.
-51-
<PAGE>
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, for another Warrant Certificate
or Warrant Certificates of like tenor evidencing in the aggregate a like number
of Warrants.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing made hereon) for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company (other than the right to receive dividends and
distributions as set forth in Section 18 of the Warrant Agreement).
------- --
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its duly authorized officer and has caused its corporate seal to be
affixed hereunto or imprinted hereon.
Dated: April __, 1996
BRUNSWICK BIOMEDICAL CORPORATION
By: ____________________________________
Name:
Title:
-52-
<PAGE>
FORM OF ELECTION TO PURCHASE
[To Be Executed Upon Exercise of Warrant]
The undersigned holder hereby represents that he or it is the registered holder
of this Warrant Certificate, and hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ____________ shares
of Class A Common Stock, par value $.01 per share (the "Class A Common Stock"),
of BRUNSWICK BIOMEDICAL CORPORATION (the "Company") and herewith tenders payment
for such shares to the order of the Company in the amount of $___________ in
accordance with the terms hereof. The undersigned requests that a certificate
for such shares be registered in the name of the undersigned or his/its nominee
hereinafter set forth, and further that such certificate be delivered to the
undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth. If said number of shares is less than all of
the shares of Class A Common Stock purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
such shares be registered in the name of the undersigned or his/its nominee
hereinafter set forth, and further that such Warrant Certificate be delivered to
the undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth.
Certificate to be registered as follows:
----------- -- -- ---------- -- -------
Name: Internationale Nederlanden (U.S.)
Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Certificate to be delivered as follows:
----------- -- -- --------- -- -------
Name: Internationale Nederlanden (U.S.)
Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Date:____________________
_______________________________________
(Signature must conform in all respects
to the name of the holder as specified
on the fact of the Warrant Certificate,
unless Form of Assignment has been
executed)
-53-
<PAGE>
FORM OF ELECTION TO CONVERT
[To be Executed Upon Conversion of Warrant]
The undersigned holder hereby represents that he or it is the registered holder
of this Warrant Certificate, and hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to convert the Warrants
evidenced by this Warrant Certificate into ____________ shares of Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), of BRUNSWICK
BIOMEDICAL CORPORATION (the "Company"). The undersigned requests that a
certificate for such shares be registered in the name of the undersigned or
his/its nominee hereinafter set forth, and further that such certificate be
delivered to the undersigned at the address hereinafter set forth or to such
other person or entity as is hereinafter set forth. If said number of shares is
less than all of the shares of Class A Common Stock convertible hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of such shares be registered in the name of the undersigned or his/its
nominee hereinafter set forth, and further that such Warrant Certificate be
delivered to the undersigned at the address hereinafter set forth or to such
other person or entity as is hereinafter set forth.
Certificate to be registered as follows:
----------- -- -- ---------- -- -------
Name: Internationale Nederlanden (U.S.)
Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Certificate to be delivered as follows:
----------- -- -- --------- -- -------
Name: Internationale Nederlanden (U.S.)
Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Date:____________________
_______________________________________
(Signature must conform in all respects
to the name of the holder as specified
on the fact of the Warrant Certificate,
unless Form of Assignment has been
executed)
-54-
<PAGE>
FORM OF ASSIGNMENT
[To be executed upon Transfer of Warrant]
FOR VALUE RECEIVED, the undersigned registered holder of the enclosed
Warrant Certificate hereby sells, assigns and transfers unto
________________________________________ the right represented by such Warrant
Certificate to purchase _____________ shares of Class A Common Stock of
BRUNSWICK BIOMEDICAL CORPORATION to which such Warrant Certificate relates, and
appoints __________________ _______________________________ Attorney to make
such transfer on the books of BRUNSWICK BIOMEDICAL CORPORATION maintained for
such purpose, with full power of substitution in the premises.
Date:___________________
_______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (Zip Code)
-55-
<PAGE>
EXHIBIT B
------- -
FORM OF SERIES B WARRANT CERTIFICATE
---- -- ------ - ------- -----------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER) AS
TO AN EXEMPTION, FROM THE REGISTRATION PROVISIONS OF SAID ACT OR LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
WARRANT PURCHASE AGREEMENT, DATED AS OF APRIL 15, 1996, BETWEEN BRUNSWICK
BIOMEDICAL CORPORATION (THE "COMPANY") AND INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION ("ING") AND A REGISTRATION RIGHTS AGREEMENT, DATED AS OF
APRIL 15, 1996, AMONG THE COMPANY AND THE PURCHASERS IDENTIFIED IN EXHIBIT A
ATTACHED THERETO, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE
COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH
SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID.
Certificate No.__ _______
Warrants
Warrant Certificate
BRUNSWICK BIOMEDICAL CORPORATION
This Warrant Certificate certifies that INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION ("ING"), or registered assigns, is the registered
---
holder of the number of Warrants (the "Warrants") set forth above to purchase
--------
shares of Class A Common Stock, par value $0.01 per share (the "Class A Common
--------------
Stock"), of BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation (the
- -----
"Company"). Each Warrant entitles the holder upon exercise to receive from the
-------
Company one fully paid and nonassessable share of Common Stock (a "Warrant
-------
Share") at the initial exercise price (the "Exercise Price") of $27.55, payable
- ----- --------------
in lawful money of the United States, upon surrender of this Warrant Certificate
and payment of the Exercise Price, if applicable, at the office of the
-56-
<PAGE>
Company designated for such purpose, subject to the conditions set forth herein
and in the Warrant Agreement referenced below. The Exercise Price and number and
type of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events, as set forth in the Warrant
Agreement. Each Warrant also entitles the holder to convert such Warrant into
the number of Warrant Shares determined in accordance with Section 11(b) of the
-------------
Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Series B Warrants, and are issued or to be issued pursuant
to a Warrant Purchase Agreement dated as of April 15, 1996 (the "Warrant
-------
Agreement"), duly executed and delivered by the Company and ING, which Warrant
- ---------
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights,
obligations and duties hereunder of the Company and the holders of the Warrants
(the words "holders" or "holder" meaning the registered holders or registered
holder). A copy of the Warrant Agreement may be obtained by the holder hereof
upon written request to the Company.
The holder of Warrants evidenced by this Warrant Certificate may
exercise such Warrants under and pursuant to the terms and conditions of the
Warrant Agreement by surrendering this Warrant Certificate, with the form of
election to purchase attached hereto (and by this reference made a part hereof)
properly completed and executed, together with payment of the Exercise Price in
cash at the office of the Company designated for such purpose. In the event that
any exercise of Warrants evidenced hereby shall be for less than the total
number of Warrants evidenced hereby, there shall be issued by the Company to the
holder hereof or his or its registered assignee a new Warrant Certificate
evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Warrant Shares issuable upon the
exercise of each Warrant shall be adjusted. No fractional shares of Warrant
Shares will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The Holders of the Warrants are entitled to certain registration
rights as set forth in a Registration Rights Agreement dated as of April 15,
1996, among the Company and the purchasers identified in Exhibit A attached
thereto (the "Registration Rights Agreement"). By acceptance of this Warrant
-----------------------------
Certificate, the Holder hereof agrees that upon exercise of any or all of the
Warrants evidenced hereby, such Holder will be bound by the Registration Rights
Agreement. A copy of the Registration Rights Agreement may be obtained by the
holder hereof upon written request to the Company.
-57-
<PAGE>
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, for another Warrant Certificate
or Warrant Certificates of like tenor evidencing in the aggregate a like number
of Warrants.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing made hereon) for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company (other than the right to receive dividends and
distributions as set forth in Section 18 of the Warrant Agreement).
------- --
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its duly authorized officer and has caused its corporate seal to be
affixed hereunto or imprinted hereon.
Dated: April __, 1996
BRUNSWICK BIOMEDICAL CORPORATION
By: ____________________________
Name:
Title:
-58-
<PAGE>
FORM OF ELECTION TO PURCHASE
[To Be Executed Upon Exercise of Warrant]
The undersigned holder hereby represents that he or it is the registered holder
of this Warrant Certificate, and hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ____________ shares
of Class A Common Stock, par value $.01 per share (the "Class A Common Stock"),
of BRUNSWICK BIOMEDICAL CORPORATION (the "Company") and herewith tenders payment
for such shares to the order of the Company in the amount of $___________ in
accordance with the terms hereof. The undersigned requests that a certificate
for such shares be registered in the name of the undersigned or his/its nominee
hereinafter set forth, and further that such certificate be delivered to the
undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth. If said number of shares is less than all of
the shares of Class A Common Stock purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
such shares be registered in the name of the undersigned or his/its nominee
hereinafter set forth, and further that such Warrant Certificate be delivered to
the undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth.
Certificate to be registered as follows:
---------------------------------------
Name: Internationale Nederlanden (U.S.)
Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Certificate to be delivered as follows:
---------------------------------------
Name: Internationale Nederlanden (U.S.)
Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Date:____________________
_______________________________________
(Signature must conform in all respects
to the name of the holder as specified
on the fact of the Warrant Certificate,
unless Form of Assignment has been
executed)
-59-
<PAGE>
FORM OF ELECTION TO CONVERT
[To Be Executed Upon Conversion of Warrant]
The undersigned holder hereby represents that he or it is the registered holder
of this Warrant Certificate, and hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to convert the Warrants
evidenced by this Warrant Certificate into____________ shares of Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), of BRUNSWICK
BIOMEDICAL CORPORATION (the "Company") and herewith tenders payment for such
shares to the order of the Company in the amount of $___________ in accordance
with the terms hereof. The undersigned requests that a certificate for such
shares be registered in the name of the undersigned or his/its nominee
hereinafter set forth, and further that such certificate be delivered to the
undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth. If said number of shares is less than all of
the shares of Class A Common Stock convertible hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
such shares be registered in the name of the undersigned or his/its nominee
hereinafter set forth, and further that such Warrant Certificate be delivered to
the undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth.
Certificate to be registered as follows:
---------------------------------------
Name: Internationale Nederlanden (U.S.)
Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Certificate to be delivered as follows:
--------------------------------------
Name: Internationale Nederlanden (U.S.)
Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Date:____________________
_______________________________________
(Signature must conform in all respects
to the name of the holder as specified
on the fact of
-60-
<PAGE>
the Warrant Certificate, unless Form of
Assignment has been executed)
-61-
<PAGE>
FORM OF ASSIGNMENT
[To be executed upon Transfer of Warrant]
FOR VALUE RECEIVED, the undersigned registered holder of the enclosed
Warrant Certificate hereby sells, assigns and transfers unto
________________________________________ the right represented by such Warrant
Certificate to purchase _____________ shares of Class A Common Stock of
BRUNSWICK BIOMEDICAL CORPORATION to which such Warrant Certificate relates, and
appoints __________________ _______________________________ Attorney to make
such transfer on the books of BRUNSWICK BIOMEDICAL CORPORATION maintained for
such purpose, with full power of substitution in the premises.
Date:___________________
_______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (Zip Code)
-62-
<PAGE>
EXHIBIT C
------- -
SCHEDULE OF EXCEPTIONS
----------------------
-63-
<PAGE>
EXHIBIT D
---------
HOLDERS OF THE COMPANY'S STOCK
------------------------------
-64-
<PAGE>
EXHIBIT E-1
------- ---
EXISTING WARRANTS
-----------------
-65-
<PAGE>
EXHIBIT E-2
------- ---
SHARES RESERVED UNDER STOCK OPTION PLAN
---------------------------------------
-66-
<PAGE>
EXHIBIT F
------- -
EXISTING REGISTRATION RIGHTS
----------------------------
-67-
<PAGE>
EXHIBIT G
---------
OPINION OF COUNSEL
------------------
-68-
<PAGE>
EXHIBIT 3(E)
REGISTRATION RIGHTS AGREEMENT
BETWEEN
BRUNSWICK BIOMEDICAL CORPORATION
AND
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
DATED AS OF APRIL 15, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS 1
Section 1. Definitions 1
(a) Defined Terms 1
(b) Cross-References 3
Section 2. Registration of Securities 3
(a) Registration by the Company 3
(b) Registration at Holder's Request 4
(c) Registration Generally 6
Section 3. Registration Expenses 11
Section 4. Conditions to Registration 12
Section 5. Indemnification 13
(a) Indemnification by the Company 13
(b) Indemnification by Holders of Warrant Securities 14
(c) Procedure 14
(d) Contribution 14
Section 6. Exchange Act Registration; Rule 144 Reporting 16
Section 7. Limitation on Registration Rights of Others 17
Section 8. Mergers, etc. 17
Section 9. Notices, etc. 18
Section 10. Entire Agreement 18
Section 11. Waivers and Further Agreements 18
Section 12. Amendments 18
Section 13. Assignment; Successors and Assigns 19
Section 14. Severability 19
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 15. Counterparts 19
Section 16. Section Headings 19
Section 17. Gender; Usage 20
Section 18. Governing Law 20
Section 19. Termination 20
Section 20. Expenses 20
Section 21. Specific Performance 20
</TABLE>
-ii-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
---------
entered into as of April 15, 1996, by and between BRUNSWICK BIOMEDICAL
CORPORATION, a Massachusetts corporation ("Brunswick"), and INTERNATIONALE
---------
NEDERLANDEN (U.S.) CAPITAL CORPORATION, a Delaware corporation (the
"Purchaser").
---------
W I T N E S S E T H:
-------------------
RECITALS:
- ---------
A. Simultaneously herewith, the Purchaser is entering into a Credit
Agreement, dated of even date herewith, among Brunswick, the Purchaser and
various other lenders that may become parties thereto (the "Lenders") and the
-------
Purchaser in its capacity as Agent for the Lenders (the "Agent");
-----
B. It is a condition precedent to the extensions of credit by the
Purchaser to Brunswick contemplated by the Credit Agreement that Brunswick agree
to issue to the Purchaser (1) Series A Warrants initially exercisable for 33,370
shares of Class A Common Stock, par value $.01 per share, of the Company (the
"Class A Common Stock") for an exercise price of $0.01 per share and (2) Series
- ---------------------
B Warrants initially exercisable for 36,298 shares of Class A Common Stock for
an exercise price of $27.55 per share; and
C. The Purchaser is unwilling to extend credit to Brunswick pursuant to
the Credit Agreement or to purchase the Warrants pursuant to the Warrant
Agreement unless it receives the assurances set forth in this Agreement; and
D. Brunswick and the Purchaser desire to set forth certain understandings
with respect to the Warrants;
NOW, THEREFORE, in consideration of the premises and the agreements herein
set forth and to induce the Purchaser to proceed with the transactions
contemplated by the Warrant Agreement and the Credit Agreement, the parties
hereto, intending to be legally bound, hereby agree as follows:
-1-
<PAGE>
Section 1. Definitions
-----------
(a) Defined Terms. The following terms (whether or not underscored)
-------------
when used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings (such meanings
to be equally applicable to the singular and plural forms thereof):
"Agreement" means this Registration Rights Agreement as in effect on the
---------
date hereof and as hereafter amended, supplemented, restated or otherwise
modified.
"Available Securities" is defined in Section 2(a).
-------------------- ------------
"Brunswick" is defined in the Preamble.
---------
"Business Day" is defined in the Warrant Agreement.
------------
"Class A Common Stock" is defined in Recital B.
-------------------- ---------
"Common Stock" is defined in the Warrant Agreement.
------------
"Company" means (a) at all times prior to the Merger Consummation Date,
-------
Brunswick, and (b) at all times on and after the Merger Consummation Date, STI.
"Credit Agreement" is defined in the Warrant Agreement.
----------------
"Estate Warrant" means the Warrant to Purchase Shares of Common Stock of
--------------
Brunswick Biomedical Corporation issued by Brunswick to the Estate of Dr.
Stanley Sarnoff in partial payment of the Purchase Price.
"Exchange Act" is defined in the Warrant Agreement.
------------
"Holder" is defined in the Warrant Agreement; provided, however, that any
------ -------- -------
reference to a Holder of Warrant Shares shall include any Holder of Warrants
exercisable for or convertible into such Warrant Shares.
"Indemnified Person" is defined in Section 5(a).
------------------ ------------
"Indemnifying Person" is defined in Section 5(c).
------------------- ------------
"Initial Request" is defined in Section 2(b).
--------------- ------------
-2-
<PAGE>
"Lenders" is defined in Recital A.
------- ---------
"Merger" is defined in the Warrant Agreement.
------
"Merger Consummation Date" is defined in the Warrant Agreement.
------------------------
"NASD" means the National Association of Securities Dealers, Inc.
----
"Person" is defined in the Warrant Agreement.
------
"Prospectus" means each prospectus included as part of any Registration
----------
Statement, as amended or supplemented, including each preliminary prospectus and
all material incorporated by reference in such prospectus.
"Purchaser" is defined in the Preamble.
---------
"Registration Expenses" is defined in Section 3(c).
--------------------- ------------
"Registration Request" is defined in Section 2(a)(ii).
-------------------- ----------------
"Registration Statement" means any registration statement of the Company
----------------------
which covers Warrant Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments, including post-effective amendments, and
supplements to such registration statement and Prospectus and all exhibits and
all material incorporated by reference in such registration statement.
"Required Holders" is defined in the Warrant Agreement.
----------------
"Secondary Requests" is defined in Section 2(b).
------------------ ------------
"Securities Act" is defined in the Warrant Agreement.
--------------
"SEC" is defined in the Warrant Agreement.
---
"Specified Registrable Securities" is defined in Section 2(a)(ii).
-------------------------------- ----------------
"STI" means Survival Technology, Inc., a Delaware corporation.
---
"Stock" is defined in the Warrant Agreement.
-----
"Warrant Agreement" means the Warrant Purchase Agreement, dated of even
-----------------
date herewith, by and between the Purchaser and Brunswick, as in effect on the
date hereof and as
-3-
<PAGE>
hereafter amended, supplemented, restated or otherwise modified.
"Warrant Securities" is defined in the Warrant Agreement.
------------------
"Warrant Shares" is defined in the Warrant Agreement.
--------------
"Warrants" is defined in the Warrant Agreement.
--------
(b) Cross-References. Unless otherwise specified, references in this
----------------
Agreement to any Article, Section, Recital or Preamble are references to such
Article, Section, Recital or Preamble of this Agreement, and unless otherwise
specified, references in any Article, Section, or definition to any clause are
references to such clause of such Section, Article or definition.
Section 2. Registration of Securities.
--------------------------
(a) Registration by the Company. If at any time or from time to time
---------------------------
the Company shall propose to file on its behalf or on behalf of any of its
security holders a registration statement under the Securities Act on Form S-1,
S-2 or S-3 (or on any other Form for the general registration of securities)
with respect to any class of equity securities (or any class of securities
convertible into or exchangeable or exercisable for such equity securities),
other than a registration relating solely to a Rule 145 transaction, a
registration of shares to be issued pursuant to an employee benefit plan or a
registration on Form S-3 relating solely to a dividend reinvestment plan, the
Company shall in each case:
(i) promptly give written notice to each Holder at least thirty
(30) days before the anticipated filing date, indicating the proposed
offering price and describing the plan of distribution;
(ii) include in such registration (and any related qualification
under blue sky or other state securities laws or other compliance) for the
sale by the Holders and, at the request of any Holder, in any underwriting
involved therein, all the Warrant Shares specified by any Holder or Holders
(the "Specified Registrable Securities") in a written request (the
--------------------------------
"Registration Request") made within twenty (20) days after receipt of such
---------------------
written notice from the Company, specifying the number or amount of
Specified Registrable Securities; and
(iii) use its best efforts to cause the managing underwriter(s) of
such proposed underwritten offering to permit the Specified Registrable
Securities to be included in the Registration Statement for such offering
on the same terms and conditions as any similar securities of the Company
included therein.
-4-
<PAGE>
If the registration of which the Company gives notice is for a registered
public offering involving an underwriting, the Company shall so advise the
Holders. In such event, the right of any Holder to include Specified
Registrable Securities in such registration pursuant to this Section 2(a) shall
------------
be conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Specified Registrable Securities in the underwriting
to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting. If the managing underwriter(s) of such offering advise(s) the
Holders of Specified Registrable Securities in writing that marketing
considerations require a limitation on the securities to be included in any
Registration Statement filed under this Section 2(a) to a certain number of
------------
shares (the "Available Securities"), then (i) if such registration is the first
--------------------
registered offering of the Company's securities to the public (including the
first such registration of STI following the Merger Consummation Date), the
Company shall in such case be obligated to such Holders only with respect to
such number of Available Securities, and (ii) if such registration is other than
such first registered offering, Specified Registrable Securities, together with
securities of all other selling shareholders to be included in such
registration, shall be not less than fifty percent (50%) of the securities
included in such registration (based on aggregate market values); provided,
--------
however, that in either case the number of Specified Registrable Securities
- -------
shall not be reduced unless all other holders of securities of the Company
(other than securities being registered pursuant to rights granted under the
Estate Warrant) are first entirely excluded from such registration and
underwriting. The limitation on the number of Specified Registrable Securities
will be imposed pro rata (based upon the ratio of the number of shares of
--- ----
Specified Registrable Securities which the managing underwriter(s) propose to
include at the anticipated offering price to the number of Specified Registrable
Securities owned by each Holder) among all Holders of Specified Registrable
Securities.
Notwithstanding any other provision of this Agreement to the contrary,
neither the delivery of the notice by the Company nor of the Registration
Request by any Holder shall in any way obligate the Company to file a
Registration Statement and, notwithstanding such filing, the Company may, at any
time prior to the effective date thereof, in its sole discretion, determine not
to offer the securities to which the Registration Statement relates without
liability to any of the Holders, other than to pay Registration Expenses in
connection with such Registration Statement. No registration of Warrant Shares
effected under this Section 2(a) shall relieve the Company of its obligation to
------------
effect registration of Warrant Shares upon the request of one or more Holders
pursuant to Section 2(b).
------------
(b) Registration at Holder's Request. Upon the written request
--------------------------------
(an "Initial Request") of one or more Holders of Warrant Securities
---------------
constituting 40% or more of all outstanding Warrant Securities made at any time
after the earlier of (i) ninety (90) days after the Merger Consummation Date, or
(ii) January 15, 1998, requesting that the Company effect the registration under
the Securities Act of all or part of the Warrant Shares held by or subject
-5-
<PAGE>
to Warrants held by such Holders and specifying the intended method or methods
of disposition of such Warrant Shares, the Company will give prompt (and in any
case within ten (10) days) written notice of such requested registration to all
Holders of Warrant Securities and thereupon will expeditiously prepare and file
a Registration Statement with respect to, and use its best efforts to effect the
registration under the Securities Act, of:
(i) the Warrant Shares which the Company has been so requested to
register by such Holders, for disposition in accordance with the intended
method of disposition stated in such request, and
(ii) all other Warrant Shares which the Company has been requested to
register by the Holders of Warrant Securities by written request (a
"Secondary Requests") delivered to the Company within twenty (20) days
------------------
after the giving of such notice by the Company;
provided, however, that the Company may delay the filing of a Registration
- -------- -------
Statement with respect to such Warrant Shares for a reasonable period (not in
excess of ninety (90) days if in its reasonable judgment such filing would
require the disclosure of material information that the Company has a bona fide
business purpose for preserving as confidential or such filing in the reasonable
judgment of the Company, would interfere with any pending financing, acquisition
or corporate reorganization, and such information, financing, acquisition or
corporate reorganization is not then otherwise required to be disclosed.
In any case where the requesting Holders specify that the intended method
of disposition is to be an underwritten offering, the underwriter(s) for such
offering shall be selected, after consultation with the Company, by such
Holders, and shall be reasonably acceptable to the Company, such acceptance not
to be unreasonably withheld, delayed or conditioned.
Each registration requested pursuant to this Section 2(b) shall be effected
------------
by the filing of a Registration Statement on Form S-1, S-2 or S-3 (or on any
other Form for the general registration of securities) unless the use of a
different form has been agreed upon in writing by the Company and the requesting
Holders; provided, however, that if the intended method of disposition by the
-------- -------
requesting Holders is to be an underwritten offering, the Company shall use such
Form of Registration Statement as is reasonably acceptable to the
underwriter(s). The Company need not cause a Registration Statement filed
pursuant to the provisions of this Section 2(b) to become effective under the
------------
Securities Act on more than two (2) occasions; provided, however, that the
-------- -------
Company shall not be deemed to have caused a Registration Statement to be filed
and to become effective under the Securities Act under this Section 2(b) unless
------------
a Registration Statement covering all Warrant Shares requested by one or more
Holders to be registered for sale in accordance with the method of disposition
specified by the requesting Holders shall have become effective and, if such
method of disposition is a
-6-
<PAGE>
firm commitment underwritten public offering, all such Warrant Shares shall have
been sold pursuant thereto.
Whenever a registration requested by one or more Holders pursuant to this
Section 2(b) is for an underwritten offering, only Warrant Shares which are to
- ------------
be distributed by the underwriters designated by such Holders may be included in
such registration, without the written consent of the Required Holders.
Notwithstanding the foregoing, unless the underwriter(s) of an underwritten
offering object(s), the Company may include securities for offering by the
Company or any other security holders in such Registration Statement, it being
understood that the Company's right and such other security holders' right to
inclusion shall be subordinate to, and not pari passu with, the rights of the
---- -----
Holders under this Section 2(b), provided, however, that the right of the Estate
------------ -------- -------
of Dr. Stanley Sarnoff to include its securities in such offering shall be as
set forth in Section 9(e) of the Estate Warrant as in effect on the Closing
Date. From the date of receipt of a notice from requesting Holders pursuant to
this Section 2(b) indicating that such Holders intend to sell securities in an
------------
underwritten offering until the completion of the period of distribution of the
registration contemplated thereby (but in no event later than 60 days following
effectiveness of such registration), except as provided in this paragraph, the
Company will not effect any other registration of its Stock (whether for its
account or that of any other security holder), other than a registration
relating solely to a Rule 145 transaction, a registration of shares to be issued
pursuant to an employee benefit plan or a registration on Form S-3 relating
solely to a dividend reinvestment plan. The immediately preceding sentence
shall apply solely to the first notice from requesting Holders pursuant to this
Section 2(b) pursuant to which (i) a Registration Statement is filed and becomes
- ------------
effective under the Securities Act, (ii) all Warrant Shares covered thereby are
registered for sale in accordance with the method of dispositions specified
therein and (iii) if such method of disposition is a firm commitment
underwritten public offering, all such Warrant Shares are sold pursuant thereto.
All Holders of Warrant Securities proposing to sell Warrant Shares in such
underwritten offering shall share pro rata in the number of shares of Warrant
--- ----
Shares to be included in such underwritten offering, such sharing to be based on
the respective numbers of Warrant Securities owned by such Holders.
(c) Registration Generally. If and when the Company shall be
----------------------
required by the provisions of this Section 2 to effect the registration of
---------
Warrant Shares under the Securities Act, the Company will use its best efforts
to effect such registration to permit the sale of such Warrant Shares in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto it will, as expeditiously as possible:
(i) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, furnish to the Holders of the Warrant
Shares covered by such Registration Statement and the underwriter(s), if
any, copies of all such documents proposed to be filed, which documents
will be made available, on a timely basis, for review by such Holders and
underwriters; and, with respect to any Registration
-7-
<PAGE>
Statement filed pursuant to the provisions of Section 2(b), the Company
------------
will not file any Registration Statement or amendment thereto or any
Prospectus or any supplement thereto to which the Required Holders of the
Warrant Shares covered by such Registration Statement or the managing
underwriter(s), if any, shall reasonably object;
(ii) prepare and file with the SEC such amendments and post-
effective amendments to any Registration Statement, and such supplements to
the Prospectus, as may be reasonably requested by any Holder of Warrant
Shares covered by such Registration Statement or the managing
underwriter(s), if any, or as may be required by the Securities Act, the
Exchange Act or by the rules, regulations or instructions applicable to the
registration Form utilized by the Company or as may otherwise be necessary
to keep such Registration Statement effective for the applicable period;
and cause the Prospectus as so supplemented to be filed pursuant to Rule
424 (or any successor rule) under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or Prospectus;
(iii) promptly notify the selling Holders of Warrant Shares and the
managing underwriter(s), if any, and if requested by any such Person,
confirm such advice in writing,
(a) of the filing of the Prospectus, any Prospectus supplement
and of the effectiveness of the Registration Statement and/or any
post-effective amendment,
(b) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information,
(c) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose,
(d) of the Company's becoming aware at any time that the
representations and warranties of the Company contemplated by
paragraph (xiv)(a) below have ceased to be true and correct,
(e) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Warrant Shares
for sale in any jurisdiction or the initiation or threat of any
proceeding for such purpose, and
-8-
<PAGE>
(f) of the existence of any fact which, to the knowledge of
the Company, results in the Registration Statement, the Prospectus or
any document incorporated therein by reference containing an untrue
statement of material fact or omitting to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(iv) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement or any
qualification referred to in paragraph (iii)(e) at the earliest possible
moment;
(v) if reasonably requested by the managing underwriter(s) or the
Required Holders of Warrant Shares being sold in connection with an
underwritten offering, promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as
the managing underwriter(s) or the Required Holders of the Warrant Shares
being sold reasonably request to have included therein relating to the plan
of distribution with respect to such Warrant Shares, including, without
limitation, information with respect to the amount of Warrant Shares being
sold to such underwriters, the purchase price being paid therefor by such
underwriters and any other terms of the underwritten (or best-efforts
underwritten) offering of the Warrant Shares to be sold in such offering;
and make all required filings of such Prospectus supplement or post-
effective amendment to the Registration Statement as soon as notified of
the matters to be incorporated in such Prospectus supplement or post-
effective amendment to the Registration Statement;
(vi) at the request of any selling Holder of Warrant Shares, furnish
to such selling Holder of Warrant Shares and each managing underwriter, if
any, without charge, at least one signed copy of the Registration Statement
and any post-effective amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference and all
exhibits (including those incorporated by reference);
(vii) deliver to each selling Holder of Warrant Shares and the
managing underwriter(s), if any, without charge, as many copies of the
Registration Statement, each Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto (in each case including
all exhibits), as such Persons may reasonably request, together with all
documents incorporated by reference in such Registration Statement or
Prospectus, and such other documents as such selling Holder may reasonably
request in order to facilitate the disposition of its Warrant Shares
covered by such Registration Statement; the Company consents to the use of
each Prospectus and any supplement thereto by each of the selling Holders
of Warrant Shares and the managing underwriter(s), if any, in connection
with the offering and sale of the Warrant Shares covered by each Prospectus
or any supplement thereto;
-9-
<PAGE>
(viii) prior to any public offering of Warrant Shares, use its best
efforts to register or qualify or reasonably cooperate with the selling
Holders of Warrant Shares, the managing underwriter(s), if any, and their
respective counsel in connection with the registration or qualification of
such Warrant Shares for offer and sale under the securities or blue sky
laws of such jurisdictions as any selling Holder or managing underwriter(s)
reasonably request(s) and do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Warrant
Shares covered by the Registration Statement, provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service or process
in any such states or jurisdictions, unless the Company is already subject
to service in such jurisdiction and except as may be required by the Act;
(ix) cooperate with the selling Holders of Warrant Shares and the
managing underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Warrant Shares to be sold and not
bearing any legends restricting the transfer thereof; and enable such
Warrant Shares to be in such denominations and registered in such names as
the managing underwriters may request at least two Business Days prior to
any sale of Warrant Securities to the underwriters;
(x) use its best efforts to cause the Warrant Shares covered by
the applicable Registration Statement to be registered with or approved by
such United States, state and local governmental agencies or authorities as
may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Warrant Shares;
(xi) if any fact contemplated by paragraph (iii)(f) above shall
exist, promptly notify each Holder on whose behalf Warrant Shares have been
registered and prepare and furnish to such Holders a supplement or post-
effective amendment to the Registration Statement or the related Prospectus
or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Warrant Shares, neither the Registration Statement nor the Prospectus will
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(xii) if requested by the Required Holders of the Warrant Shares
covered by the Registration Statement or by the managing underwriter(s), if
any, use its best efforts to cause all Warrant Shares covered by the
Registration Statement to be (A) listed on each securities exchange on
which securities of the same class are then listed or (B) admitted for
trading in any inter-dealer quotation system on which securities of the
same class are then traded;
-10-
<PAGE>
(xiii) not later than the effective date of the applicable
Registration Statement, provide a CUSIP number for all Warrant Shares
covered by the Registration Statement and provide the applicable transfer
agent with printed certificates for such Warrant Shares which are in a form
eligible for deposit with Depository Trust Company;
(xiv) enter into agreements (including underwriting agreements) and
take all other reasonable actions in order to expedite or facilitate the
disposition of such Warrant Shares and in such connection, except as
otherwise provided, whether or not an underwriting agreement is entered
into and whether or not the registration is an underwritten registration:
(a) make such representations and warranties to the Holders
selling such Warrant Shares and, in connection with any underwritten
offering, to the underwriters, in form, substance and scope as are
customarily made by issuers to underwriters in similar underwritten
offerings;
(b) use its best efforts to obtain opinions of counsel to the
Company and updates thereof addressed to each selling Holder and the
underwriters, if any, covering the matters customarily covered in
opinions requested in similar underwritten offerings and such other
matters as may be reasonably requested by such Holders and
underwriters, which counsel and opinions shall be reasonably
satisfactory (in form, scope and substance) to the managing
underwriters, if any, and the Required Holders of such Warrant Shares;
(c) in connection with any underwritten offering, use its
best efforts to obtain so-called "cold comfort" letters and updates
thereof from the Company's independent certified public accountants
addressed to the selling Holders of Warrant Shares and the
underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters to underwriters in connection with similar underwritten
offerings;
(d) if an underwriting agreement is entered into, cause the
same to set forth in full the indemnification and contribution
provisions and procedures of Section 5 (or such other substantially
---------
similar provisions and procedures as the underwriters shall reasonably
request) with respect to all parties to be indemnified pursuant to
said Section 5; and
---------
(e) deliver such documents and certificates as may reasonably
be requested by the Required Holders of the Warrant Shares being sold,
or the managing underwriter(s), if any, to evidence compliance with
this paragraph (xiv) and with any customary conditions contained in
the underwriting
-11-
<PAGE>
agreement or other agreement entered into by the Company;
the foregoing to be done upon each closing under any underwriting or
similar agreement as and to the extent required thereunder and from time to
time as may reasonably be requested by any selling Holder of Warrant Shares
in connection with the disposition of Warrant Shares pursuant to such
Registration Statement, all in a manner consistent with customary industry
practice;
(xv) upon execution and delivery of such confidentiality agreements
as the Company may reasonably request, make available to the Holders of the
Warrant Shares being sold, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant
retained by such Holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney or
accountant in connection with the registration for purposes of satisfying
any diligence obligations such Persons may have, at such time or times as
the Person requesting such information shall reasonably determine;
(xvi) otherwise use its best efforts to comply with the Securities
Act, the Exchange Act, all applicable rules and regulations of the SEC and
all applicable state blue sky and other securities laws, rules and
regulations, and make generally available to its security holders an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act, as soon as practicable, but in no event later than ninety
(90) days after the end of the 12 calendar month period commencing after
the effective date of the Registration Statement;
(xvii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and regulations of the
NASD); and
(xviii) prior to the filing of any document which is being prepared
for incorporation by reference into the Registration Statement or the
Prospectus, upon receipt of such confidentiality agreements as the Company
may reasonably request, provide copies of such document to counsel to the
selling Holders of Warrant Shares, and to the managing underwriter(s), if
any, and make the Company's representatives available for discussion of
such document.
Each Holder agrees, if requested by the Company and an underwriter of Warrant
Shares (or other securities) of the Company, not to sell or otherwise transfer
or dispose of any Warrant Shares (or other securities) of the Company held by it
during the 180-day period following the
-12-
<PAGE>
effective date of a registration statement of the Company filed under the Act,
provided that (a) such agreement only applies to the first such registration
statement of the Company including securities to be sold on its behalf to the
public in an underwritten offering (which shall include the first such
registration statement of STI following the Merger Consummation Date) and (b)
all holders of Preferred Stock of Brunswick (or of shares of STI issued in
exchange for such Preferred Stock pursuant to the Merger), and officers and
directors of the Company enter into or are otherwise subject to similar
agreements (except that if any such agreement provides for a shorter non-sale
period, the non-sale period applicable to the Holders under this sentence shall
be the shortest of such periods).
Such agreement shall be in writing in a form satisfactory to the Company and
such underwriter. The Company may impose stop-transfer instructions with respect
to the shares (or securities) subject to the foregoing restriction until the end
of the 90-day period.
Section 3. Registration Expenses .
---------------------
(a) All expenses incident to the Company's performance of or
compliance with its obligations under this Agreement (excluding underwriting
discounts, selling commissions and brokerage fees) will be paid by the Company,
regardless of whether Warrant Shares are sold pursuant to any Registration
Statement, including, without limitation:
(i) all registration, filing and listing fees;
(ii) fees and expenses of compliance with securities or blue sky laws
to the extent the Company is obligated to act under Section 2(c)(viii)
------------------
(including, without limitation, the reasonable fees and disbursements of
counsel for the underwriters, if any, or selling Holders in connection with
blue sky and state securities qualifications of Warrant Shares and
determination of their eligibility for investment under the laws of such
jurisdictions as the managing underwriter(s), if any, or the Required
Holders of the Warrant Shares covered by such Registration Statement may
reasonably designate);
(iii) printing (including, without limitation, expenses of printing
or engraving certificates for the Warrant Shares in a form eligible for
deposit with Depository Trust Company and of printing prospectuses),
messenger, telephone and delivery expenses;
(iv) fees and disbursements of counsel for the Company and, subject
to Section 3(b), counsel for the selling Holders of the Warrant Shares;
------------
(v) fees and disbursements of all independent certified public
accountants of the Company (including, without limitation, the expenses of
any special audit and, in connection with any underwritten offering, "cold
comfort" letters required by or
-13-
<PAGE>
incident to such performance);
(vi) Securities Act liability insurance if the Company so desires;
(vii) fees and expenses of other Persons (including special
experts) retained by the Company; and
(viii) fees and expenses associated with any NASD filing required
to be made in connection with the Registration Statement, including, if
applicable, the fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained in
accordance with the rules and regulations of the NASD.
The Company will, in any event, pay its internal expenses, the expense of any
annual audit, the fees and expenses incurred in connection with the listing of
the securities to be registered on each securities exchange on which securities
of the same class are then listed or the qualification for trading of the
securities to be registered in each inter-dealer quotation system in which
securities of the same class are then traded, and rating agency fees.
(b) In connection with each Registration Statement required
hereunder, the Company will reimburse the Holders of Warrant Shares being
registered pursuant to such Registration Statement for the reasonable fees and
disbursements of not more than one counsel chosen by the Required Holders of the
Warrant Shares being sold; the expense of any additional counsel for the Holders
shall be paid by the Holders.
(c) The term "Registration Expenses" shall mean the expenses
---------------------
payable by the Company pursuant to the provisions of this Section 3.
---------
(d) Notwithstanding the foregoing, if a registration request under
Section 2 is subsequently withdrawn at the request of the Holders of Warrant
Shares requesting registration and if the requesting Holders elect not to have
such registration counted as a registration requested under Section 2, the
requesting Holders shall pay the expenses of such registration pro rata in
accordance with the number of their Warrant Shares included in such
registration.
Section 4. Conditions to Registration.
--------------------------
Each Holder's right to have Warrant Shares included in any
Registration Statement filed by the Company in accordance with the provisions of
Section 2 shall be subject to the following conditions:
- ---------
(a) The Holders on whose behalf such Warrant Shares are to be
included shall be required to furnish the Company in a timely manner with all
information required by
-14-
<PAGE>
the applicable rules and regulations of the SEC concerning the proposed method
of sale or other disposition of such securities, the identity of and
compensation to be paid to any proposed underwriters to be employed in
connection therewith, and such other information as may be reasonably required
by the Company properly to prepare and file such Registration Statement in
accordance with applicable provisions of the Securities Act;
(b) If any such Holder desires to sell and distribute Warrant
Shares over a period of time, or from time to time, at then prevailing market
prices, then any such Holder shall execute and deliver to the Company such
written undertakings as the Company and its counsel may reasonably require in
order to assure full compliance with relevant provisions of the Securities Act
and the Exchange Act;
(c) In the case of any registration requested pursuant to the
provisions of Section 2(a), the offering price for any Warrant Shares to be so
------------
registered shall be no less than for any shares of the same class then to be
registered for sale for the account of the Company or other security holders and
the offering price for shares of Class A Common Stock shall be no less than for
Voting Common Stock, unless such Warrant Shares are to be offered from time to
time based on the prevailing market price;
(d) Upon receipt of any notice from the Company of the happening
of any event of the kind described in paragraph (xi) of Section 2(c), such
------------
Holder will forthwith discontinue disposition of Warrant Shares until such
Holder's receipt of the copies of the supplemented Prospectus contemplated by
such paragraph, or until it is advised in writing by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the Prospectus, and,
if so directed by the Company, such Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Warrant Shares current at
the time of receipt of such notice; and
(e) In the case of any underwritten offering on behalf of the
Holders of Warrant Shares, such Holders will enter into such agreements
(including underwriting agreements and lock-up agreements) as the managing
underwriter(s) shall reasonably request and as are customary in similar
circumstances.
Section 5. Indemnification.
---------------
(a) Indemnification by the Company. In the event of the
------------------------------
registration of any Warrant Shares under the Securities Act pursuant to the
provisions hereof, the Company will indemnify and hold harmless each and every
seller of Warrant Shares, its directors, officers, employees and agents, each
underwriter, broker and dealer, if any, who participates in the offering or sale
of such Shares, and each other Person, if any, who controls such seller or any
such underwriter, broker or dealer within the meaning of either Section 15 of
the Securities
-15-
<PAGE>
Act or Section 20 of the Exchange Act (each such Person being hereinafter
sometimes referred to as an "Indemnified Person" provided that for
------------------
clauses (b), (c) and (d) of this Section 5 "Indemnified Person" shall include
the Company, its directors, officers, employees and agents, and each other
Person, if any who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act) from and against any
losses, claims, damages, liabilities or expenses, joint or several, to which
such indemnified Person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained or
incorporated by reference in any Registration Statement or Prospectus or any
amendment or supplement thereto, or any document incorporated by reference
therein, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each such Indemnified
Person for any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
-------- -------
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made or incorporated by reference in
the Registration Statement or Prospectus or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by such Indemnified Person stated to be specifically for use in
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Person
and shall survive the transfer of such Warrant Shares by such seller.
(b) Indemnification by Holders of Warrant Shares. In the
--------------------------------------------
event of the registration of any Warrant Shares under the Securities Act
pursuant to the provisions hereof, each Holder on whose behalf such Warrant
Shares shall have been registered will indemnify and hold harmless each and
every Indemnified Person, against any losses, claims, damages or liabilities,
joint or several, to which such Indemnified Person may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained or incorporated by reference in any Registration Statement or
Prospectus or any amendment or supplement thereto or any document incorporated
by reference therein, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which untrue statement
or alleged untrue statement or omission or alleged omission has been made or
incorporated therein in reliance upon and in conformity with written information
furnished to the Company by such Holder specifically stating that it is for use
in preparation thereof, and will reimburse each such Indemnified Person for any
legal and other expenses reasonably incurred by such Indemnified Person in
connection with investigating or defending any such loss, claim, damage,
liability or action;
-16-
<PAGE>
provided, however, that the liability of each Holder hereunder shall be limited
to the proceeds received by such Holder from the sale of Warrant Shares covered
by such Registration Statement.
(c) Procedure. Promptly after receipt by an Indemnified
---------
Person of notice of the commencement of any action (including any governmental
investigation or inquiry), such Indemnified Person will, if such Indemnified
Person intends to make a claim in respect thereof against the party agreeing to
indemnify such Indemnified Person pursuant to paragraphs (a) or (b) hereof (any
such Party being hereinafter referred to as an "Indemnifying Person"), give
-------------------
written notice to such Indemnifying Person of the commencement thereof, but the
omission so to notify the Indemnifying Person shall not relieve the Indemnifying
Person from any of its obligations pursuant to the provisions of this Section 5
---------
except to the extent that the Indemnifying Person is actually prejudiced by such
failure to give notice. In case any such action is brought against any
Indemnified Person and it notifies an Indemnifying Person of the commencement
thereof, the Indemnifying Person shall be entitled to participate in, and to the
extent that it may wish, jointly with any other Indemnifying Person similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such Indemnified Person, and after notice from the Indemnifying Person to such
Indemnified Person, the Indemnifying Person shall not, except as hereinafter
provided, be responsible for any legal or other expenses subsequently incurred
by such Indemnified Person in connection with the defense thereof. No
Indemnifying Person will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Person of a release from all
liability in respect of such claim or litigation.
Such Indemnified Person shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be the expense of such Indemnified
Person unless (a) the Indemnifying Person has agreed to pay such fees and
expenses or (b) the Indemnifying Person shall have failed to assume the defense
of such action or proceeding or has failed to employ counsel reasonably
satisfactory to such Indemnified Person in any such action or proceeding or (c)
the named parties to any such action or proceeding (including any impleaded
parties) include both such Indemnified Person and the Indemnifying Person and
such Indemnified Person shall have been advised by counsel that representation
of both parties by the same counsel would be inappropriate due to actual or
potential material differing interests between them (in which case, if such
Indemnified Person notifies the Indemnifying Person in writing that it elects to
employ separate counsel at the expense of the Indemnifying Person, the
Indemnifying Person shall not have the right to assume the defense of such
action or proceeding on behalf of such Indemnified Person). The Indemnifying
Person shall not be liable for any settlement of any such action or proceeding
effected without its written consent, which consent shall not unreasonably be
withheld, delayed or conditioned, but if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or proceeding,
the Company agrees to indemnify and hold harmless such Indemnified Persons from
and against any loss or liability by reason of such settlement
-17-
<PAGE>
or judgment.
(d) Contribution. If the indemnification provided for in
------------
this Section 5 is unavailable to a party that would have been an Indemnified
---------
Person under this Section 5 in respect of any losses, claims, damages,
---------
liabilities or expenses (or actions in respect thereof) referred to herein, then
each party that would have been an Indemnifying Person thereunder shall, in lieu
of indemnifying such Indemnified Person, contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person on the one
hand and the Indemnified Person on the other in connection with the statement or
omission which resulted in such losses, claims, damages, liabilities or expenses
(or actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission of a material fact relates to information
supplied by the Indemnifying Person or the Indemnified Person and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 5(c), any legal or other fees or expenses reasonably incurred by such
- ------------
party in connection with the investigation or defense of any action or claim.
The Company and each Holder of Warrant Shares agrees that it would not be just
and equitable if contribution pursuant to this Section 5 were determined by pro
--------- ---
rata allocation or by any other method of allocation which does not take account
- ----
of the equitable considerations referred to in this Section 5. Notwithstanding
---------
the provisions of this Section 5(d), no Holder of Warrant Shares shall be
------------
required to contribute any amount in excess of the amount by which the total
price at which the Warrant Shares sold by it exceeds the amount of any damages
which such Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission.
No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
Indemnification or, if appropriate, contribution, similar to that
specified in the preceding provisions of this Section 5 (with appropriate
---------
modifications) shall be given by the Company and each seller of Warrant Shares
with respect to any required registration or other qualification of such Shares
under any federal or state law or Regulation or governmental authority other
than the Securities Act.
In the event of any underwritten offering of Warrant Shares under the
Securities Act pursuant to the provisions of Section 2, the Company and each
---------
Holder on whose behalf such Warrant Shares shall have been registered agree to
enter into an underwriting agreement, in standard form, with the underwriters,
which underwriting agreement
-18-
<PAGE>
may contain additional provisions with respect to indemnification and
contribution in lieu thereof.
Section 6. Exchange Act Registration; Rule 144 Reporting.
---------------------------------------------
The Company covenants and agrees that until such time as the Holders no
longer hold any Warrant Shares it will:
(a) if required by law, maintain an effective registration
statement (containing such information and documents as the SEC shall specify)
with respect to the Common Stock of the Company under Section 12(g) of the
Exchange Act;
(b) use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times after the effective date that the Company becomes
subject to the reporting requirements of the Securities Act or the Exchange Act
(even if the Company subsequently ceases to be subject to such reporting
requirements);
(c) use its best efforts to file with the SEC in a timely manner
all reports and documents required of the Company under the Securities Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements); and
(d) furnish to any Holder promptly upon request (i) a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company for an offering of its Shares
to the general public), and of the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements), (ii) a copy of
the most recent annual or quarterly report of the Company (beginning after the
Company becomes subject to such reporting requirements), and (iii) such other
reports and documents of the Company and other information in the possession of
or reasonably attainable by the Company as such Holder may reasonably request in
availing itself of any Rule or Regulation of the SEC allowing such Holder to
sell any such Shares without registration.
The Company represents and warrants that such registration statement
or any information, document or report filed with the SEC in connection
therewith or any information so made public shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements contained therein
not misleading. The Company agrees to indemnify and hold harmless (or to the
extent the same is not enforceable, make contribution to) the Holders, their
partners, officers, directors, employees and agents, each broker, dealer or
underwriter (within the meaning of the Securities Act) acting for any Holder in
connection with any offering or sale by such Holder of Warrant Shares or any
Person controlling (within the meaning of either
-19-
<PAGE>
Section 15 of the Securities Act or Section 20 of the Exchange Act) such Holder
and any such broker, dealer or underwriter from and against any and all losses,
claims, damages, liabilities or expenses (or actions in respect thereof) arising
out of or resulting from any breach of the foregoing representation or warranty,
all on terms and conditions comparable to those set forth in Section 5.
---------
Section 7. Limitation on Registration Rights of Others .
-------------------------------------------
The Company represents and warrants that, except as set forth on Exhibit E
of the Warrant Agreement, it has not granted to any Person the right to request
or require the Company to register any Shares issued by the Company. The
Company covenants and agrees that, so long as any Holder holds any Warrant
Shares in respect of which any registration rights provided for in Section 2
---------
remain in effect, the Company will not, directly or indirectly, grant to any
Person or agree to or otherwise become obligated in respect of (a) any
registration rights of securities of the Company upon the demand of any Person
without the prior written consent of the Required Holders; or (b) rights of
registration in the nature or substantially in the nature of those set forth in
Section 2(a), unless in each such case such rights are expressly subject and
- ------------
subordinated to the rights of registration of the Holders pursuant to Section
-------
2(a) and 2(b) hereof on terms reasonably satisfactory to the Required Holders,
- ---- ----
which shall include, without limitation, priority of registration over any
Person exercising any such demand (whether upon exercise of rights of
registration of the Holders pursuant to Section 2(a) or Section 2(b)).
------------ ------------
Section 8. Mergers, etc..
------------
In addition to any other restrictions on mergers, consolidations and
reorganizations contained in the Warrant Agreement or in the articles of
incorporation or organization, by-laws or agreements of the Company, the Company
covenants and agrees that it shall not, directly or indirectly, enter into any
merger, consolidation or reorganization in which the Company shall not be the
surviving corporation and in which the Holders shall not have had the option to
receive cash for all their Warrant Shares, unless the surviving corporation
shall, prior to such merger, consolidation or reorganization, agree in a writing
satisfactory in form, scope and substance to the Required Holders to assume the
obligations of the Company under this Agreement, and for such purpose references
hereunder to "Warrant Shares" shall be deemed to include the Shares which such
Holders would be entitled to receive in exchange for Warrant Shares pursuant to
any such merger, consolidation or reorganization.
If, and as often as, there are any changes in the Warrant Shares by way of
stock split, stock dividend, combination or classification, or through merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustments shall be made in the provisions hereof as may be
required, so that the rights and privileges granted hereby shall continue with
respect to the Warrant Shares as so changed.
-20-
<PAGE>
Upon consummation of the Merger, this Agreement and all obligations of
Brunswick hereunder shall become the legal, valid and binding obligations of
STI, enforceable against STI in accordance with their terms, as if STI had been
the signatory hereto.
Section 9. Notices, etc.
------------
All notices, consents, approvals, agreements and other communications
provided hereunder shall be in writing or by telex or telecopy and shall be
sufficiently given to the Purchaser, the Holders and the Company if addressed or
delivered to them in accordance with Section 20 of the Warrant Agreement:
Section 10. Entire Agreement.
----------------
The parties hereto agree that this Agreement and the agreements
specifically referred to in Section 33 of the Warrant Agreement constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between them as to such
subject matter; and there are no restrictions, agreements, arrangements, oral or
written, between any or all of the parties relating to the subject matter hereof
which are not fully expressed or referred to herein or therein.
Section 11. Waivers and Further Agreements.
------------------------------
Any waiver of any terms or conditions of this Agreement shall not operate
as a waiver of any other breach of such terms or conditions or any other term or
condition, nor shall any failure to enforce any provision hereof operate as a
waiver of such provision or of any other provision hereof; provided, however,
-------- -------
that no such written waiver unless it by its own terms explicitly provides to
the contrary, shall be construed to effect a continuing waiver of the provision
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision. Each of the parties hereto agrees
to execute all such further instruments and documents and to take all such
further action as the other parties may reasonably require in order to
effectuate the terms and purposes of this Agreement.
Section 12. Amendments.
----------
This Agreement may not be amended nor shall any waiver, change,
modification, consent or discharge be effected except by an instrument in
writing executed by or on behalf of the party or parties against whom
enforcement of any amendment, waiver, change, modification, consent or discharge
is sought; provided, however, that any amendment requested or waiver sought from
-------- -------
the Holders of any provision of this Agreement which affects the Holders
generally, and any action required to be taken by the Holders as a group
pursuant
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<PAGE>
to this Agreement, shall be given or taken by the Required Holders, and any such
waiver or action so given or taken shall be binding on all Holders. No failure
or delay by any party in exercising any right or remedy hereunder shall operate
as a waiver thereof, and a waiver of a particular right or remedy on one
occasion shall not be deemed a waiver of any other right or remedy or a waiver
of the same right or remedy on any subsequent occasion.
Section 13. Assignment; Successors and Assigns.
----------------------------------
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, legal representatives,
successors and permitted assigns, including, without limitation, any Holders,
from time to time of the Warrant Securities. Nothing herein shall be construed
as requiring the Holders of Warrants to exercise their warrants for, or convert
their Warrants into, Warrant Shares prior to exercising the rights conferred
upon such Holders under this Agreement. Anything in this Agreement to the
contrary notwithstanding, the term "Holders" as used in this Agreement shall be
deemed to include the registered Holders from time to time of the Warrant
Securities.
Section 14. Severability.
------------
If any provision of this Agreement shall be held or deemed to be, or shall
in fact be, invalid, inoperative or unenforceable as applied to any particular
case in any jurisdiction or jurisdictions, or in all jurisdictions or in all
cases, because any provision conflicts with any constitution, statute, Rule or
public policy, or for any other reason, such circumstance shall not have the
effect of rendering the provision or provisions in question, invalid,
inoperative or unenforceable in any other jurisdiction or in any other case or
circumstance or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute, Rule or
public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative or unenforceable provision
had never been contained herein and such provision reformed so that it would be
valid, operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case.
Section 15. Counterparts.
------------
This Agreement may be executed in two or more counterparts (each of which
need not be executed by each of the parties), each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument, and in pleading or proving any provision of this Agreement, it shall
not be necessary to produce more than one such counterpart.
-22-
<PAGE>
Section 16. Section Headings.
----------------
The headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
Section 17. Gender; Usage.
-------------
Whenever used herein the singular number shall include the plural, the
plural shall include the singular, and the use of any gender shall include all
genders. The words "hereof," "herein" and "hereunder," and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
Section 18. Governing Law.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK OTHER THAN THE CONFLICTS OF
LAWS PRINCIPLES THEREOF.
Section 19. Termination.
-----------
This Agreement shall terminate when all Warrants have expired unexercised
in accordance with their terms or when all Warrant Shares have been purchased
pursuant to Sections 19 of the Warrant Agreement. In addition, the rights of
------------
any Holder under Sections 2(a) and 2(b) of this Agreement shall terminate as to
------------- ----
any Warrant Shares when such Warrant Shares have been effectively registered
under the Securities Act and sold pursuant to a Registration Statement covering
such Warrant Shares. The indemnification and contribution provisions of
Sections 5 and 6 shall survive any termination of this Agreement.
- ---------- -
Section 20. Expenses.
--------
The Company shall be obligated to pay to the Holders, on demand, all
reasonable costs and expenses (including, without limitation, court costs and
attorneys' fees and expenses and interest to the extent permitted by applicable
law on overdue amounts) paid or incurred in collecting any sums due from, or
enforcing any other obligations of, the Company.
Section 21. Specific Performance.
--------------------
The Company recognizes that the rights of the Holders under this Agreement
are unique and, accordingly, the Holders shall, in addition to such other
remedies as may be available to any of them at law or in equity, have the right
to enforce their rights hereunder by actions for injunctive relief and specific
performance to the extent permitted by law. The Company
-23-
<PAGE>
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. This Agreement is not intended to limit or
abridge any rights of the Holders which may exist apart from this Agreement.
-24-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BRUNSWICK BIOMEDICAL CORPORATION
By: /s/ James H. Miller
----------------------
James H. Miller
President
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
By: /s/ Darren Wells
-------------------
Darren Wells
Managing Director
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<PAGE>
EXHIBIT 4(A)
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") dated as of March 18, 1996
is between BRUNSWICK BIOMEDICAL CORPORATION (the "Buyer"), a Massachusetts
corporation, and the ESTATE OF DR. STANLEY J. SARNOFF, Robert Herzstein as
Personal Representative (the "Seller" or the "Estate"). It relates to the
purchase by the Buyer from the Seller of 1,888,126 shares (the "Shares") of
Common Stock, $.10 par value (the "Common Stock"), of Survival Technology, Inc.
("STI"), a Delaware corporation, which Shares constitute approximately 60% of
the issued and outstanding Common Stock.
In consideration of the mutual representations, warranties and covenants
herein contained, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Shares Sold and Acquired. Subject to the terms and conditions set
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forth in this Agreement, on the Closing Date (as defined below), the Seller
shall sell, transfer and deliver to the Buyer or its nominee, and the Buyer
shall purchase, acquire and accept from the Seller the Shares. Each share
certificate representing the Shares shall be duly endorsed by the holder thereof
in blank for transfer or accompanied by a stock power duly executed by such
holder assigning the Shares held by such holder in blank, in each case with a
customary signature guaranty.
1.2 Assignment of Registration Agreement. On the Closing Date, in
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connection with the sale of the Shares, the Seller shall assign to the Buyer all
of the Seller's rights and interest under the Registration Rights Agreement
dated September 14, 1990 between STI and the Seller (the "Registration
Agreement"). Such assignment shall be substantially in the form of Exhibit E
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attached hereto.
1.3 Consideration. The Buyer shall deliver to the Seller on the Closing
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Date, as consideration for the sale, transfer and delivery to the Buyer of the
Shares, an aggregate purchase price of $20,769,386.00 (the "Purchase Price").
The Purchase Price shall consist of $16,069,386 payable in cash by wire transfer
of immediately available funds (the "Cash Payment"), a promissory note issued by
the Buyer in the original principal amount of $4,700,000 in the form of Exhibit
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A attached hereto (the "Note"), and warrants in the form of Exhibit B hereto
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(the "Warrants") to purchase 50,000 shares of common stock of the Buyer at an
exercise price of $27.55 a share, subject to adjustment as set forth in Exhibit
B.
1.4 The Closing. The closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place at the offices of STI or at such
other place as the parties may agree on the business day (the"Closing Date") set
by the Buyer upon at least five business days' written notice to the Seller
following the date upon which all conditions set forth in Article 5
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(other than those to be satisfied at Closing) have been satisfied or waived.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller hereby represents and warrants to the Buyer as follows:
2.1 Authorized and Effective Agreement. The Seller is an estate governed
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by testamentary instruments and applicable provisions of Maryland law. This
Agreement has been duly authorized, executed and delivered by the Seller, and
the Seller has the right, power, authority and legal capacity to enter into and
perform the obligations to be performed by it under this Agreement and to
consummate the transactions contemplated of it hereby. This Agreement
constitutes the valid and binding obligation of the Seller, enforceable in
accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
2.2 Ownership of the Shares. The Seller is, and on and as of the Closing
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Date will be, the owner, beneficially and of record, of the Shares, which on the
date hereof constitute not less than 60% of the issued and outstanding shares of
Common Stock of STI. The Shares are, and on and as of the Closing Date will be,
owned beneficially and of record by the Seller free and clear of any lien, claim
or other encumbrance and of any restriction or limitation of any nature
whatsoever (collectively, "Liens"). By delivery of the Shares at the Closing,
in exchange for the consideration provided in Section 1.3, the Seller will
convey to the Buyer good and marketable title to the Shares, free and clear of
any Lien. The Seller has not granted any warrants, options or other rights, or
entered into any agreement or other commitment, which obligate the Seller to
sell, transfer or otherwise dispose of any of the Shares to anyone other than
the Buyer or which affect the right of the Seller or its successor as holder of
the Shares to vote or to dispose of the Shares. The Seller does not on the date
of this Agreement, nor will the Seller on and as of the Closing Date, own or
have any right, warrant, option or other agreement to acquire any shares of
capital stock or other securities of STI from STI or any other person except for
the Shares and an option to acquire 32,500 shares of Common Stock granted by STI
dated September 14, 1990, as amended effective as of September 14, 1993, which
option is not being transferred to the Buyer.
2.3 No Consent; Non-Contravention. No consent of any other party and no
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consent, license, approval or authorization of, or exemption by, or registration
or declaration or filing with, any governmental authority, is required in
connection with the execution, delivery, validity or enforceability of this
Agreement with respect to the Seller or the consummation by the Seller of the
transactions contemplated hereby. The execution, delivery and performance by
the Seller of this Agreement does not and will not (i) violate any provision of
the certificate of incorporation or by-laws of STI, (ii) conflict with or result
in a breach of, or constitute a default under any agreement, understanding or
arrangement to which the Seller is a party or by which it is bound, or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Seller.
2.4 Regarding STI. The Seller has no knowledge (i) of any facts or
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circumstances
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that cause STI's Annual Report on Form 10-K for the year ended July 31, 1995 or
any report filed by STI with the Securities and Exchange Commission (the
"Commission") subsequent to such date, as of their respective dates and as
finally amended, to contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading or (ii) of any material adverse change in the financial condition
or results of operations of STI since the end of the quarter to which its most
recently filed Form 10-K or Form 10-Q, as applicable, relates or any change in
its capitalization from that shown in such Form 10-K or Form 10-Q.
2.5 Litigation. Except as set forth on Schedule 2.5, to the best of
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Seller's knowledge, there is neither pending nor threatened any action, suit,
proceeding or claim to which the Seller or STI is or may be named as a party
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated herein.
2.6 Registration Agreement. The Registration Agreement has been duly
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authorized, executed and delivered by the parties thereto and constitutes the
valid and binding obligation of such paries, enforceable in accordance with its
terms subject, as to enforceability, to bankruptcy, insolvency and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. The rights of the Seller under the Registration Agreement
will, on the Closing Date, have been duly and effectively assigned by the Seller
to the Buyer hereunder.
2.7 Investment Representations. (a) The Seller is acquiring the Note and
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the Warrants, and will acquire any shares of common stock of the Buyer issuable
on exercise of the Warrants, for investment for its own account (subject to
distributions to any beneficiaries of the Estate in accordance with the
testamentary instruments governing the Estate or any orders of any court of
competent jurisdiction or under applicable law), and not with a view to the
resale or distribution of any part thereof, and has and will have no present
intention of selling, granting any participation in, or otherwise distributing
the same within the meaning of the Securities Act of 1933, as amended (the
"Securities Act").
(b) The Seller (either alone or together with its advisors) has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of its investment in the Note, the
Warrants and any shares issuable upon exercise of the Warrants.
2.8 Absence of Registration. The Seller understands and acknowledges that
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the issuance of the Note and the Warrants pursuant to this Agreement, and the
issuance of shares upon exercise of the Warrants, will not be registered under
the Securities Act or under any applicable blue sky or state securities law on
the grounds that such transfer is exempt from registration and that the
availability of such exemption is predicated in part upon the Seller's
representations set forth in this Agreement. The Seller acknowledges and
understands that the Note, the Warrants and any shares issuable on exercise of
the Warrants acquired by the Seller must be held indefinitely unless such Note,
Warrants or shares are subsequently registered under the Securities Act and
applicable blue sky laws or an exemption from such registration is available.
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2.9 Brokers and Finders. Neither the Seller nor, to the Seller's
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knowledge, STI has employed any broker, finder or financial advisor or incurred
any liability for any fees or commissions of any broker, finder or financial
advisor in connection with the transactions contemplated herein, except for
STI's retention of Merrill Lynch, Pierce, Fenner & Smith, Incorporated and the
Seller's retention of Josephthal, Lyon & Ross, Incorporated ("Josephthal") to
perform certain financial advisory services as previously disclosed.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to the Seller as follows, except
as set forth on the "Disclosure Schedule" attached hereto (the section numbers
of which are numbered and correspond only to the section numbers of this
Agreement to which they refer):
3.1 Organization, Standing and Authority of Buyer.
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(a) The Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts, with full
corporate power and authority to carry on its business as now conducted. Each
Subsidiary (as defined in paragraph (f) below) is an entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, with full power and authority to carry on its business as now
conducted.
(b) The Buyer has, and on the Closing Date will have, all requisite
corporate power and authority to enter into and perform all of its obligations
under this Agreement, the Note, the Warrants and the security agreements and
related documents identified on Schedule II hereto to which it is a party (the
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"Other Agreements"). The execution and delivery of this Agreement, the Note,
the Warrants and the Other Agreements and the consummation of the transactions
contemplated hereby and thereby have been, or will be on the Closing Date, duly
and validly authorized by all necessary corporate action in respect thereof on
the part of the Buyer.
(c) This Agreement constitutes, and upon execution and delivery thereof,
the Note, the Warrants and the Other Agreements will constitute, the legal,
valid and binding obligations of the Buyer, enforceable against it in accordance
with its terms, subject, as to enforceability, to bankruptcy, insolvency and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles. The shares of common stock of the Buyer
issuable upon exercise of the Warrants, when issued in accordance with the terms
of the Warrants upon payment of the exercise price specified therein, will be
duly authorized, validly issued and fully paid and nonassessable. No
shareholder has any preemptive rights or rights of first refusal by reason of
the issuance of the Warrants which rights have not or prior to the Closing Date
will not have been waived.
(d) The execution, delivery and performance of this Agreement, the Note,
the Warrants and the Other Agreements by the Buyer do not and will not (i)
conflict with or result in a breach of any provision of the articles of
organization or by-laws of the Buyer, (ii) require any consent by any person
under, constitute or result in a breach of any term, condition or
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provision of, or constitute a default or give rise to any right of termination
or acceleration under any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Buyer or any of its Subsidiaries is
a party or by which it is bound, (iii) violate any, law, order, writ, judgment,
injunction, decree, statute, rule or regulation applicable to the Buyer or any
of its Subsidiaries, or (iv) result in the creation or imposition of any Lien on
any assets of the Buyer or any of its Subsidiaries.
(e) The Buyer has furnished to the Seller a true, correct and complete
copy of its articles of organization and by-laws, as amended to date.
(f) The Disclosure Schedule sets forth all of the Subsidiaries of the
Buyer and the jurisdiction in which each is organized. All issued and
outstanding shares or other equity interest of each Subsidiary are owned
directly by the Seller free and clear of any Lien, and there are no other shares
of capital stock or other equity interest of any Subsidiary outstanding or any
subscriptions, options, conversion or exchange rights, warrants, repurchase or
redemption agreements, or other agreements, claims or commitments of any nature
whatsoever obligating any Subsidiary to issue, transfer, deliver or sell, or
cause to be issued, transferred, delivered, sold, repurchased or redeemed,
additional shares of the capital stock or other securities or equity interests
of any Subsidiary or obligating the Buyer or any Subsidiary to grant, extend or
enter into any such agreement. As used in this Agreement, "Subsidiary" means any
corporation or other legal entity of which the Buyer or any Subsidiary owns,
directly or indirectly, 50% or more of the stock or other equity interest
entitled to vote for the election of directors.
3.2 Government Approval. No authorization or consent, and no registration
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or filing with any governmental or regulatory official, body or authority is
required in connection with the execution, delivery and performance of this
Agreement, the Note, the Warrants or the Other Agreements by the Buyer or the
consummation of the transactions contemplated hereby, other than those which
have been or on the Closing Date will have been obtained or made.
3.3 Capitalization. The authorized capital stock of the Buyer consists of
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1,975,000 shares of common stock, $.01 par value ("Buyer's Common Stock"), and
1,400,000 of Preferred Stock, $.01 par value (the "Preferred Stock"), of which
65,000 shares are Series A Preferred Stock ("Series A Preferred"), 30,000 shares
are Series B Preferred Stock ("Series B Preferred"), 380,000 shares are Series C
Preferred Stock ("Series C Preferred"), 50,000 shares are Series D Preferred
Stock ("Series D Preferred"), 30,000 shares are Series E Preferred Stock
("Series E Preferred"), and 210,000 shares are Series F Preferred Stock ("Series
F Preferred"). There are presently 66,780 shares of Buyer's Common Stock,
64,665 shares of Series A Preferred, 29,144 shares of Series B Preferred,
374,462 shares of Series C Preferred, 45,695 shares of Series D Preferred and up
to 25,816 shares of Series E Preferred issued and outstanding. Except for
warrants issued to the holders of the Series C Preferred, Series D Preferred and
Series E Preferred to purchase up to 98,524 shares of Buyer's Common Stock in
the aggregate, warrants issued to certain other persons to purchase up to 2,400
shares of Buyer's Common Stock in the aggregate and 155,493 shares of Buyer's
Common Stock reserved for issuance pursuant to its 1993 Stock Option Plan, there
are no outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon the Buyer for the purchase or
acquisition of any shares of its capital stock, except as contemplated by this
Agreement, as set forth in the Disclosure Schedule and the conversion rights
with respect to
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preferred stock contemplated by the Buyer's articles of organization, as amended
to date.
3.4 Financial Information. The audited financial statements of the Buyer
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and its Subsidiaries as of June 30, 1995 and related notes (the "Buyer's
Financial Statements"), including the balance sheet at June 30, 1995 (the
"Buyer's Balance Sheet") and the income statement for the year ended June 30,
1995, and the unaudited financial statements of the Buyer and its Subsidiaries
as of September 30, 1995 (the "Buyer's Interim Financials"), including the
balance sheet at September 30, 1995 (the "Buyer's Interim Balance Sheet") and
the income statement for the three months ended September 30, 1995, present
fairly the financial position and results of operations of the Buyer and its
Subsidiaries, on a consolidated basis, at the dates and for the periods to which
they relate, have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods indicated and show all
material liabilities, absolute or contingent, of the Buyer and its Subsidiaries
required to be recorded thereon in accordance with generally accepted accounting
principles as at the respective dates thereof.
3.5 Absence of Undisclosed Liabilities. As of June 30, 1995 and September
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30, 1995, respectively, the Buyer and its Subsidiaries had no material
liabilities (whether accrued, absolute, fixed, contingent or otherwise,
including without limitation any tax liabilities due or to become due) which are
not fully reflected or provided for on the Buyer's Balance Sheet and the Buyer's
Interim Balance Sheet which are required to be reflected or provided for therein
or described in the notes thereto, and since September 30, 1995 the Buyer and
its Subsidiaries have not incurred any material liabilities other than
liabilities incurred in the ordinary course of business.
3.6 Absence of Certain Changes. Since the date of the Buyer's Interim
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Balance Sheet, there has not been any event or condition of any character which
has materially and adversely affected the business or prospects of the Buyer and
its Subsidiaries, taken as a whole, including but not limited to:
a. any material adverse change in the financial condition, results
of operation, business, properties or prospects of the Buyer and its
Subsidiaries, taken as a whole;
b. any damage, destruction or loss of any of the properties or
assets of the Buyer or any Subsidiary (whether or not covered by insurance)
materially adversely affecting the business or prospects of the Buyer and its
Subsidiaries, taken as a whole;
c. any declaration, setting aside or payment or other distribution
in respect of any of the Buyer's capital stock or any direct or indirect
redemption, purchase or other acquisition of any such stock by the Buyer;
d. any incurrence, assumption or guarantee by the Buyer or any of
its Subsidiaries of any material indebtedness for borrowed money;
e. any creation or assumption by the Buyer or any of its
subsidiaries of any Lien on any material asset other than in the ordinary course
of business consistent with past practices;
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f. any making of any loan, advance or capital contribution to or
investment in any person other than loans, advances or capital contributions to
or investments in wholly-owned Subsidiaries of Buyer made in the ordinary course
of business consistent with past practices;
g. any transaction or commitment made, or any contract or
agreement entered into, by the Buyer or any of its Subsidiaries relating to its
assets or business (including the acquisition or disposition of any assets) or
any relinquishment by the Buyer or any of its Subsidiaries of any contract or
other right, in either case, material to the Buyer and its Subsidiaries, taken
as a whole, other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this
Agreement;
h. any change in any method of accounting or accounting practice
by the Buyer or any Subsidiaries; or
i. any labor trouble, or any event or condition of any character,
materially adversely affecting the business or prospects of the Buyer and its
Subsidiaries, taken as a whole.
3.7 Taxes. The Buyer and its Subsidiaries filed or will file within the
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time prescribed by law (including extensions of time approved by the appropriate
taxing authority) all tax returns and reports required to be filed with the
United States Internal Revenue Service and with the Commonwealth of
Massachusetts and with all other jurisdictions where such filing is required by
law. The Buyer and its Subsidiaries have paid, or adequate provision has been
made in the Buyer's Balance Sheet and the Buyer's Interim Balance Sheet for the
payment of, all taxes, interest, penalties, assessments or deficiencies shown to
be due or claimed to be due on or in respect of such tax returns and reports.
The Buyer knows of (a) no other tax returns or reports which are required to be
filed which have not been so filed and (b) no unpaid assessment for additional
taxes for any fiscal period or any basis therefor. The Buyer's Federal income
tax returns have not, to the best of the Buyer's knowledge and belief, been
audited by the United States Internal Revenue Service nor by any state taxing
authority.
3.8 Litigation. There is neither pending nor, to the best of the Buyer's
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knowledge, threatened any action, suit, proceeding or claim, or any basis
therefor or threat thereof, whether or not purportedly on behalf of the Buyer or
any Subsidiary, to which the Buyer or any Subsidiary is or may be named as a
party or its property or assets is or may be subject and in which an unfavorable
outcome, ruling or finding in any such matter or for all such matters taken as a
whole might have a material adverse effect on the condition, financial or
otherwise, or operations of the Buyer and its Subsidiaries, taken as a whole, or
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated herein.
3.9 ERISA. Neither the Buyer nor any Subsidiary maintains any pension,
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defined benefit or defined contribution plans for its employees which are
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
3.10 Environmental Matters. Neither the Buyer nor any Subsidiary has ever
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generated, transported, used, stored, treated, disposed of, or managed any
Hazardous Waste (as defined
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below). To the best of the Buyer's knowledge, (i) no Hazardous Material (as
defined below) has ever been or is threatened to be spilled, released, or
disposed of at any site presently or formerly owned, operated, leased, or used
by the Buyer or any Subsidiary during the period such site is or was so owned,
operated, leased or used by the Buyer or such Subsidiary; (ii) no Hazardous
Material has ever been transported from any site presently or formerly owned,
operated, leased, or used by the Buyer or any Subsidiary for treatment, storage,
or disposal at any other place during the period such site is or was so owned,
operated, leased or used by the Buyer or such Subsidiary; (iii) neither the
Buyer nor any Subsidiary presently owns, operates, leases or uses, nor has it
previously owned, operated, leased, or used any, site on which underground
storage tanks are or were located; (iv) no lien has ever been imposed by any
governmental agency on any property, facility, machinery, or equipment owned,
operated, leased, or used by the Buyer or any Subsidiary in connection with the
presence of any Hazardous Material; (v) neither the Buyer nor any Subsidiary has
any liability under, nor has it ever violated any, Environmental Law (as defined
below); (vi) the Buyer and each Subsidiary, all property owned, operated,
leased, or used by them, and all facilities and operations thereon are presently
in compliance with all applicable Environmental Laws; and (vii) neither the
Buyer nor any Subsidiary has ever entered into or been subject to any judgment,
consent decree, compliance order, or administrative order with respect to any
environmental or health and safety matter or received any request for
information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to the enforcement of any Environmental
Law. For purposes of this paragraph, the following definitions shall apply:
"Hazardous Material" shall mean and include any hazardous waste, hazardous
material, hazardous substance, toxic substance, pollutant, contaminant, or other
substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law. "Hazardous Waste"
shall mean and include any hazardous waste as defined or regulated under any
Environmental Law. "Environmental Law" shall mean any federal or Massachusetts
environmental or health and safety-related law, regulation, rule, ordinance, or
by-law, whether existing as of the date of this Agreement, previously enforced,
or subsequently enacted.
3.11 Compliance; Permits. (a) Neither the Buyer nor any of its
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Subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Buyer or any of
its Subsidiaries or by which its or any of their respective properties is bound
or affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Buyer or any of its Subsidiaries is a party or by which the Buyer or any of its
Subsidiaries or its or any of their respective properties is bound or affected,
except for any conflicts, defaults or violations which could not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the condition, financial or otherwise, or operations of the Buyer and its
Subsidiaries, taken as a whole. To the best knowledge of the Buyer, no
investigation or review by any governmental or regulatory body or authority is
pending or threatened against the Buyer or its Subsidiaries, nor has any
governmental or regulatory body or authority indicated an intention to conduct
the same, other than, in each such case, those the outcome of which could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the condition, financial or otherwise, or operations of the
Buyer and its Subsidiaries, taken as a whole.
(b) The Buyer and its Subsidiaries hold all permits, licenses, variances,
exemptions,
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orders and approvals from governmental authorities which are material to
operation of the business of the Buyer and its Subsidiaries taken as a whole.
The Buyer and its Subsidiaries are in compliance with the terms of such Permits,
except where the failure to so comply could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
condition, financial or otherwise, or operations of the Buyer and its
Subsidiaries, taken as a whole.
3.12 Investment Representations. (a) The Buyer is acquiring the Shares for
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investment for its own account, and not with a view to the resale or
distribution of any part thereof, and has no present intention of selling,
granting any participation in, or otherwise distributing the same within the
meaning of the Securities Act.
(b) The Buyer (either alone or together with its advisors) has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of its investment in the Shares.
3.13 Absence of Registration. The Buyer understands and acknowledges that
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the transfer of the Shares pursuant to this Agreement will not be registered
under the Securities Act or under any applicable blue sky or state securities
law on the grounds that such transfer is exempt from registration and that the
availability of such exemption is predicated in part upon the Buyer's
representations set forth in this Agreement. The Buyer acknowledges and
understands that the Shares acquired by the Buyer must be held indefinitely
unless such Shares are subsequently registered under the Securities Act and
applicable blue sky laws or an exemption from such registration is available.
3.14 Financing. The Buyer has, as of the date hereof, entered into a
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financing commitment with a lender identified in the commitment for the amounts,
and subject to the terms and conditions, set forth on the Disclosure Schedule
(the "Financing Commitment"). The Buyer has furnished a true, correct and
complete copy of the Financing Commitment to the Seller. Assuming consummation
of the financing contemplated by the Financing Commitment, the Buyer has, or as
of the Closing will have, and Buyer has no reason to believe that as of the
Closing it will not have, sufficient cash, commitments, available lines of
credit or other sources of immediately available funds to enable it to make the
Cash Payment.
3.15 Brokers and Finders. The Buyer has not employed any broker, finder or
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financial advisor or incurred any liability for any fees or commissions of any
broker, finder or financial advisor in connection with the transactions
contemplated herein, except for the retention of Vector Securities
International, Inc. as financial advisor.
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ARTICLE 4
COVENANTS OF SELLER AND BUYER
4.1 Covenants of Seller. The Seller covenants and agrees as follows:
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4.1.1 Completion of Transaction. It shall use all reasonable efforts
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to cause the transactions contemplated by this Agreement to be consummated and
the conditions to such consummation set forth in Article 5 to be met, including
without limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with and give all
notices to third parties which may be necessary or reasonably required in order
to effect such transactions. It shall not take any action that will result in
any assignment, transfer or disposition of, or creation of any Lien on, the
Shares or that will restrict the Seller's ability to transfer the Shares to the
Buyer as contemplated by this Agreement.
4.1.2 Access to Properties and Cooperation. The Seller shall use
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reasonable efforts to cause STI prior to the Closing Date to give to the Buyer,
its agents, representatives and financing sources, full access, upon reasonable
notice, during normal business hours to all of the properties, books, tax
returns, contracts, commitments and records of STI, and to furnish to the Buyer,
its agents, representatives and financing sources all such documents, certified
if requested, and information with respect to its affairs as the Buyer, its
agents, representatives and financing sources, may from time to time reasonably
request.
4.2 Covenants of Buyer. The Buyer covenants and agrees as follows:
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4.2.1 Completion of Transaction. Prior to the Closing Date, it shall
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use all reasonable efforts to cause the transactions contemplated by this
Agreement to be consummated by the Buyer and the conditions to such consummation
set forth in Article 5 to be met, including, without limiting the generality of
the foregoing, to make all filings with and give all notices to third parties
which may be necessary or reasonably required in order to effect the
transactions contemplated hereby and to seek to complete its financing in
accordance with the Financing Commitment. The Buyer agrees to cooperate with
the Seller and STI to the extent necessary to obtain any consents or to make any
filing required in connection with the transactions contemplated by this
Agreement.
4.2.2 Access to Properties and Cooperation. The Buyer shall prior to
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the Closing Date give to the Seller, its agents, representatives and financing
sources, full access, upon reasonable notice, during normal business hours to
all of the properties, books, tax returns, contracts, commitments and records of
the Buyer and its Subsidiaries, and shall furnish to the Seller, its agents,
representatives and financing sources all such documents, certified if
requested, and information with respect to its affairs as the Seller, its
agents, representatives and financing sources, may from time to time reasonably
request.
4.2.3 Conduct of Business. Prior to the Closing Date, the Buyer
-------------------
shall, and shall cause each Subsidiary to, (i) conduct its business in the
usual, regular and ordinary course consistent with past practice, (ii) use
reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain the
services of its officers and key employees and (iii) take no action which would
materially adversely affect or materially delay the ability of either the Seller
or the Buyer to obtain any necessary approvals
- 10 -
<PAGE>
required for the transactions contemplated hereby or to perform its covenants
and agreements under this Agreement. Prior to the Closing Date, without
limiting the generality of the foregoing, except as set forth in Section 4.2.3
of the Disclosure Schedule and, except as expressly contemplated or permitted by
this Agreement, the Buyer shall not, and shall cause each Subsidiary not to,
without the prior written consent of the Seller:
(a) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money (other than
short-term indebtedness incurred to refinance short-term indebtedness
and indebtedness of the Buyer to finance the purchase of the Shares),
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation
or other entity, or make any loan or advance;
(b) (i) adjust, split, combine or reclassify any capital stock
without making appropriate provision for adjusting the number of
shares of Buyer Common Stock issuable on exercise of the Warrants in
order to avoid dilution; (ii) make, declare or pay any dividend or
make any other distribution on, or directly or indirectly redeem,
purchase or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable or
exercisable for any shares of its capital stock or such securities;
(iii) grant any person any right to acquire any shares of its capital
stock; (iv) issue, deliver or sell, or agree to issue, deliver or
sell, any additional shares of capital stock or any securities or
obligations convertible into or exchangeable or exercisable for any
shares of its capital stock or such securities, except (1) pursuant to
the exercise of options or warrants to acquire shares of its capital
stock outstanding as of the date of this Agreement or (2) on an arm's-
length basis for not less than fair consideration; or (v) enter into
any agreement, understanding or arrangement with respect to the sale
or voting of its capital stock except as permitted by clause(2) of the
preceding clause (iv).
(c) sell, transfer, pledge, mortgage, encumber or otherwise dispose
of any of its properties or assets to any individual, corporation or
other entity, or cancel, release or assign any indebtedness to any
such person or any claims held by any such person, except (i) in the
ordinary course of business consistent with past practice, (ii)
pursuant to contracts or agreements in force at the date of this
Agreement or (iii) to secure indebtedness incurred to finance the
purchase of the Shares;
(d) merge or consolidate with any other person or acquire a
material amount of assets or capital stock of any other person;
(e) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material
contact or agreement, or make any change in any of its material leases
or contracts, other than renewals of contracts and leases without
material adverse changes of terms;
(f) make or propose any changes in its Articles of Organization or
Bylaws
- 11 -
<PAGE>
which would materially and adversely affect the rights or interests of
the Seller or which would prevent the Buyer from fulfilling its
obligations under this Agreement; or
(g) agree to, or make any commitment to, take any of the actions
prohibited by this Section 4.2.3.
ARTICLE 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent to the Obligations of Both Parties. The
-------------------------------------------------------
respective obligations of the parties to consummate the transactions
contemplated by this Agreement shall be subject to satisfaction or waiver of the
following conditions at or prior to the Closing Date:
(a) The parties hereto shall have received all regulatory approvals
required or mutually deemed necessary in connection with the transactions
contemplated by this Agreement and all notice periods and waiting periods
required after the granting of any such approvals shall have passed.
(b) Neither of the parties hereto shall be subject to any order,
decree, direction, notice or injunction of a court, agency or other governmental
entity of competent jurisdiction which enjoins or prohibits the consummation of
the transactions contemplated by this Agreement or otherwise materially impairs
the ability of either party to consummate the transactions contemplated hereby,
and there shall not be any other event in any proceeding that renders it
unlawful for either party, or deprives either party of its authority, to
consummate the transactions contemplated hereby.
(c) The Board of Directors of STI shall have approved the
transaction contemplated by this Agreement such that the supermajority vote
provisions and restrictions of Section 203 of the Delaware General Corporation
Law will not apply to this Agreement and neither of the parties shall be an
"interested stockholder" for purposes of that section, and such approval shall
be in full force and effect on the Closing Date.
5.2 Conditions Precedent to the Obligations of Seller. The obligations of
-------------------------------------------------
the Seller to consummate the transactions contemplated by this Agreement shall
be subject to satisfaction or waiver of the following additional conditions at
or prior to the Closing Date:
(a) The representations and warranties of the Buyer set forth in
Article 3 hereof shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date), except (i) as otherwise
contemplated by this Agreement or consented to in writing by the Seller and (ii)
insofar as the failure of any representation and warranty to be true and correct
does not have, and is not reasonably likely to have, a material adverse effect
on the financial condition, results of operations, business, properties or
prospects of the Buyer.
(b) The Buyer shall have in all material respects (i) performed all
obligations
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<PAGE>
and (ii) complied with all covenants required by this Agreement.
(c) The Buyer shall have delivered to the Seller the Cash Payment,
the Warrant and the Note provided for under Section 1.3 and Other Agreements
identified on Schedule II hereto.
-----------
(d) The Buyer shall have delivered to the Seller a certificate,
dated the Closing Date and signed by its Chief Executive Officer or Chief
Financial Officer, to the effect that the conditions set forth in this section
have been satisfied.
(e) The Seller shall have received the legal opinion of Palmer &
Dodge, counsel to the Buyer, dated the Closing Date and substantially in the
form attached hereto as Exhibit C.
---------
(f) The opinion of Josephthal, dated the date hereof, received by
the Seller to the effect that, as of the date hereof, the consideration to be
received by the Seller hereunder for the Shares is fair to the Seller from a
financial point of view, a true, correct and complete copy of which has been
furnished to the Buyer, shall not have been withdrawn.
5.3 Conditions Precedent to the Obligations of Buyer. The obligations of
------------------------------------------------
the Buyer to consummate the transactions contemplated by this Agreement shall be
subject to satisfaction or waiver of the following additional conditions at or
prior to the Closing Date:
(a) The representations and warranties of the Seller set forth in
Article 2 hereof shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date), except as otherwise
contemplated by this Agreement or consented to in writing by the Buyer.
(b) From the date of this Agreement to the Closing Date, (i) the
business and affairs of STI shall have been conducted only in the ordinary
course consistent with past practice and (ii) there shall not have been any
material adverse change in the capitalization, financial condition, results of
operation, business, properties or prospects of STI.
(c) The Seller shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement.
(d) The Seller shall have delivered to the Buyer a certificate,
dated the Closing Date and signed by its Personal Representative, to the effect
that the conditions set forth in paragraphs (a) and (c) of this section have
been satisfied.
(e) The Buyer shall have received the legal opinion of Bradshaw,
Thomas & Yeatman LLP, special Maryland counsel to the Seller, dated the Closing
Date and substantially in the form attached hereto as Exhibit D.
---------
(f) The financing contemplated by the Financing Commitment shall
have been completed except to the extent that a failure to complete such
financing is due to the willful fault
- 13 -
<PAGE>
of the Buyer.
(g) The Shares shall constitute not less than 60% of the issued and
outstanding shares of Common Stock, not less than 60% of the ordinary voting
power of STI and not less than 55% of such issued and outstanding shares and all
shares of Common Stock issuable upon exercise or conversion of then outstanding
warrants, options, convertible securities or other rights to acquire shares of
Common Stock, and ownership of the Shares will be transferred to the Buyer free
and clear of any lien or adverse claim to title.
ARTICLE 6
FURTHER ASSURANCES
6.1 Seller's Further Assurances. The Seller shall execute, acknowledge
---------------------------
and deliver any further assignments, conveyances and other assurances, documents
and instruments of transfer reasonably requested by the Buyer and will take any
other action consistent with the terms of this Agreement that may be reasonably
requested by the Buyer for the purpose of selling, transferring, assigning,
granting, conveying, delivering or confirming to the Buyer as of the Closing
Date any or all of the Shares.
6.2 Buyer's Further Assurances. The Buyer, at any time after the Closing
--------------------------
Date, shall execute, acknowledge and deliver any further assurances, documents
and instruments of transfer reasonably requested by the Seller and will take any
other action consistent with the terms of this Agreement that may be reasonably
requested by the Seller for the purpose of concluding the transactions
contemplated by this Agreement.
ARTICLE 7
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination. This Agreement may be terminated:
-----------
(a) At any time on or prior to the Closing Date, by the mutual consent in
writing of the parties hereto.
(b) At any time on or prior to the Closing Date, by the Buyer or the
Seller, in writing, if the other party has, in any material respect, breached
(i) any covenant or agreement contained herein or (ii) any representation or
warranty contained herein, if the failure of any such representation or warranty
to be true and correct as of the date of this Agreement has, or is reasonably
likely to have, a material adverse effect upon the nonbreaching party or a
material adverse effect on the ability to consummate the transactions
contemplated herein, and in either case if such breach has not been cured by the
earlier of 30 days after the date on which written notice of such breach is
given to the party committing such breach or the Closing Date.
(c) By either party hereto in writing, if the Closing Date has not
occurred by the close of business on the 30th day after the date of this
Agreement; provided that either party may extend the termination date by up to
fifteen days, upon written notice to the other party at least five business days
prior to such termination date, if such additional time is required to complete
the Buyer's financing and, in the case of the Buyer, it has used its best
efforts to complete its financing in accordance with the Financing Commitment by
such termination date.
- 14 -
<PAGE>
7.2 Effect of Termination. In the event this Agreement is terminated
---------------------
pursuant to Section 7.1 hereof, this Agreement shall become void and have no
effect, except that (i) the provisions relating to termination fees set forth in
Section 7.3 and expenses set forth in Section 8.1 hereof shall survive any such
termination and (ii) a termination pursuant to Section 7.1(b) shall not relieve
the breaching party from liability for an uncured willful or fraudulent breach
of such covenant or agreement giving rise to such termination.
7.3 Termination Fee. If the Seller has terminated this Agreement or
---------------
declined to consummate the transactions contemplated by this Agreement because
the condition set forth in Section 5.2 (f) has not been met for reasons beyond
the control of the Buyer (the "Termination Event"), the Seller shall make a cash
payment to the Buyer in the amount of $110,000 to reimburse the Buyer for a
portion of the costs and expenses related to entering into this Agreement and
seeking to consummate such transactions. Any payment required by this section
will be payable by the Seller to the Buyer (by wire transfer of immediately
available funds to an account designed by the Buyer) within five business days
after demand by the Buyer.
7.4 Effect of Representations and Warranties. (a) All representations and
----------------------------------------
warranties contained in this Agreement (other than Section 2.4 and any other
representation and warranty contained in Article 2 to the extent it relates to
the condition or affairs of STI, which representations and warranties shall not
survive the Closing) shall survive the Closing and shall be unaffected by any
investigation made by either party, provided that the representations and
warranties set forth in Sections 2.5 through 2.10 shall terminate one year after
the Closing Date and the remaining representations and warranties shall expire
upon expiration of the applicable statute of limitations.
(b) No representation or warranty of the Seller shall be deemed
breached on account of any matter which is known to James H. Miller, who is the
Chief Executive Officer of both the Buyer and STI, or, to the extent it relates
to STI, should have been known to James H. Miller in his capacity as Chief
Executive Officer of STI.
7.5 Waiver. The Buyer and the Seller, respectively, by written instrument
------
signed by an authorized officer or representative of such party, may at any time
extend the time for the performance of any of the obligations or other acts of
the Seller or the Buyer, and may waive (i) any inaccuracies of the other party
in the representations or warranties contained in this Agreement, or any
document delivered pursuant hereto, (ii) compliance with any of the covenants,
undertakings or agreements of such party, or satisfaction of any of the
conditions precedent to its obligations, contained herein, or (iii) the
performance by such party of any of its obligations set out herein.
7.6 Amendment or Supplement. This Agreement may not be amended or
-----------------------
supplemented except by a written instrument signed by the parties hereto.
- 15 -
<PAGE>
ARTICLE 8
MISCELLANEOUS
8.1 Expenses. Each party hereto shall bear and pay all costs and expenses
--------
incurred by it in connection with the transactions contemplated in this
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel.
8.2 Entire Agreement. This Agreement contains the entire agreement
----------------
between the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings, written or oral, with
respect thereto. The parties hereto in executing and delivering, and in
carrying out the provisions of, this Agreement are relying solely on the
representations, warranties and covenants contained in this Agreement or in any
writing delivered pursuant to provisions of this Agreement or at the Closing,
and not upon any representation, warranty, covenant, or information, written or
oral, made by any person other than as specifically set forth herein. The
inclusion of any matter in information previously disclosed by STI or the Seller
shall not be deemed an admission or otherwise to imply that any such matter is
material for purposes of this Agreement.
8.3 Benefit of Agreement; No Assignment. The terms and conditions of this
-----------------------------------
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors. Except as specifically set forth herein, no
party hereto may assign any of its rights or obligations under this Agreement to
any other person, except that the Buyer may collaterally assign its rights under
this Agreement to the lender under the Financing Commitment in a form reasonably
satisfactory to the Seller. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors, any rights, remedies, obligations or liabilities.
8.4 Remedies. The parties agree that in the event of any breach of the
--------
provisions of this Agreement, the Buyer's remedies at law will be inadequate,
and that the Buyer shall be entitled, in addition to all other rights and
remedies it may have at law, to specific performance, injunctive and other
equitable relief. The Buyer shall be entitled to indemnification from the
Seller for any such breach, including without limitation reasonable attorneys'
fees and costs of suit.
8.5 Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by facsimile transmission or overnight express or by registered or
certified mail, postage prepaid, addressed as follows:
If to the Estate of Dr. Stanley J. Sarnoff:
Robert Herzstein, Personal Representative
Shearman & Sterling
801 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Facsimile No.: (202) 508-8100
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<PAGE>
With a required copy to:
Wachtell, Lipton, Rosen & Katz
51 W. 52nd St.
New York, NY 10019
Attention: Gavin Solotar, Esq.
Facsimile No.: (212) 403-2000
If to the Buyer:
Brunswick Biomedical Corporation
6 Thacher Lane
Wareham, MA 02571
Attention: Chief Executive Officer
Facsimile No.: (508) 460-7702
With a required copy to:
Palmer & Dodge
One Beacon Street
Boston, MA 02108
Attention: Stanley Keller, Esq.
Facsimile No.: (617) 227-4420
8.6 Capacity of Estate. The Personal Representative of the Estate of Dr.
------------------
Stanley J. Sarnoff is executing this Agreement in his representative capacity
only and shall not have any personal liability hereunder or in connection
herewith, whether asserted upon a direct claim or in any other manner.
8.7 Captions. The captions contained in this Agreement are for reference
--------
purposes only and are not part of this Agreement.
8.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
8.9 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware applicable to agreements made
and entirely to be performed within such jurisdiction, except to the extent
federal law may be applicable.
- 17 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed in counterparts under seal by
their duly authorized officers or representatives, all as of the day and year
first above written.
ESTATE OF DR. STANLEY J. SARNOFF
By: /s/ Robert Herzstein
------------------------------------------
Personal Representative and not
individually
BRUNSWICK BIOMEDICAL CORPORATION
By: /s/ James H. Miller
----------------------
Title: President
- 18 -
<PAGE>
LIST OF EXHIBITS
Exhibit A Form of Note, including form of Stock Pledge Agreement
Exhibit B Form of Warrant
Exhibit C Form of Buyer's Counsel Opinion
Exhibit D Form of Seller's Counsel Opinion(s)
Exhibit E Form of Assignment of Rights under Registration Rights Agreement
- 19 -
<PAGE>
SCHEDULE II
OTHER AGREEMENTS
Stock Pledge Agreement dated as of April 15, 1996 by and between Brunswick
Biomedical Corporation and Robert Herzstein, as Personal Representative of
the Estate of Dr. Stanley J. Sarnoff.
- 20 -
<PAGE>
SCHEDULE 2.5
------------
On February 12, 1993, the Stanley J. Sarnoff Endowment for
Cardiovascular Science, Inc. filed a petition (which petition is attached hereto
as Exhibit A) in the Orphans' Court for Montgomery County, Maryland (Admin. No.
1992-1458) to compel immediate distribution to the Endowment of the assets of
the Estate, to remove Mr. Herzstein as Personal representative of the Estate, to
vacate prior orders granting attorneys' fees and commissions in connection with
the Estate, and for other relief.
On March 1, 1993, Mr. Herzstein as Personal Representative, filed a
complaint, and an amended complaint on March 19, 1993 (which amended complaint
is attached hereto as Exhibit B), for Declaratory Relief in the Circuit Court
for Montgomery County, Maryland (Civ. No. 103086) against the Endowment,
seeking, among other things, a declaration that, pursuant to the interrorem or
----------
forfeiture clause of the Sarnoff Will, the Endowment forfeited any entitlement
to receive assets of the Estate and that all provisions of the Sarnoff Will in
favor of the Endowment are null and void. The Complaint further alleged, among
other things, that the Endowment forfeited any entitlement to its bequest under
the common law and the Maryland Estate and Trusts Code, including the doctrine
of cy pres.
-- ----
Following a March 3, 1993 hearing, the Orphans' Court, among other
things, declined to order the requested immediate distribution of all assets of
the Estate to the Endowment, but ruled that the Personal Representative should
distribute a lesser sum to the Endowment (which order is attached hereto as
Exhibit C).
By agreement dated September 28, 1993 executed by counsel for the
Personal Representative and counsel for the Endowment, it was agreed that in
order to explore the possibility of resolving the differences between the
parties and to facilitate mutual efforts to maximize the value of the Estate's
assets the above-referenced litigation between the parties in both the Orphans'
Court and the Circuit Court would be dismissed without prejudice in accordance
with certain stipulations agreed to by the parties (which stipulations are
attached hereto as Exhibit D). The parties also agreed to toll the statute of
limitations, which agreements have since been extended.
The Endowment has addressed the potential sale of stock to Buyer in a
number of letters. Copies of letters dated February 9, 1996 and February 28,
1996 and certain subsequent correspondence on that subject have been provided to
Buyer. In the February 28, 1996 letter, the Endowment purported to give thirty
(30) days written notice of an intention to file a lawsuit against the Personal
Representative.
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<PAGE>
DISCLOSURE SCHEDULE
To Stock Purchase Agreement
1. With respect to the representations and warranties set forth in Section
3.1(f), the Buyer has the following Subsidiaries:
Brunswick Biomedical Technologies, Inc., a Massachusetts corporation
Brunswick Biomedical Limited, a British limited liability company
2. With respect to the representations and warranties set forth in Sections
3.3 and 3.6 and elsewhere in Article 3, the Buyer discloses that, in addition to
the documents contemplated by this Agreement, the following agreements are being
negotiated and, in some instances, binding commitment letters or documents with
respect to the disclosed transaction have been executed:
a. Series F Preferred Stock Purchase Agreement between the Buyer and the
Purchasers of Series F Preferred Stock, with respect to the purchase at
$27.55 per share of up to 210,000 shares of Series F Preferred Stock, par
value $0.01 per share.
b. Senior Loan Agreement with Internationale Nederlanden (U.S.) Capital
Corporation ("ING"), providing for a $11,000,000 credit facility secured by
substantially all the assets of the Buyer, including the Estate Shares, and
for the issuance of warrants to purchase up to 65,167 shares of Common
Stock of the Buyer.
c. Note Purchase Agreement between the Buyer and EM Industries, Inc.,
providing for a junior subordinated loan in the amount of $1,000,000.
d. Undertaking by the Buyer to EM Industries, Inc. to use its best
efforts to cause STI to enter into an extension of the EpiPen License
Agreement.
e. Undertaking by the Buyer to the Board of Directors of STI regarding
the future conduct of the operations and affairs of STI.
f. Stock Repurchase Agreement by and between the Company and the State of
Maryland Department of Business and Economic Development ("DBED"), pursuant
to which the Company agrees to repurchase the Series D Preferred Stock and
Warrants from DBED if the Company fails to relocate its principal office
to Maryland within six months or removes its principal office from Maryland
within 5 years after locating there.
3. With respect to the representations and warranties set forth in Section
3.14, the Buyer discloses that it has entered into a financing commitment with
ING with respect to the financing described in paragraph 2a. above for the
amounts and subject to the terms and conditions of the Commitment Letter dated
March 18, 1996 from ING previously delivered to the Seller.
4. With respect to the covenants set forth in Section 4.2.3, the Buyer
discloses that, in addition to the indebtedness to be incurred as described in
this Agreement, the Buyer has incurred or expects to incur the indebtedness
described in paragraphs 2b. and 2c. above.
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<PAGE>
EXHIBIT A, PART I
[See Exhibit 4(c) to this Schedule 13D]
- 23 -
<PAGE>
EXHIBIT A, PART II
[See Exhibit 4(d) to this Schedule 13D]
- 24 -
<PAGE>
EXHIBIT B
[See Exhibit 4(b) to this Schedule 13D]
- 25 -
<PAGE>
EXHIBIT C
[Form of opinion letter omitted]
- 26 -
<PAGE>
EXHIBIT D
[Form of opinion letter omitted]
- 27 -
<PAGE>
EXHIBIT E
ASSIGNMENT OF RIGHTS UNDER REGISTRATION
RIGHTS AGREEMENT
WHEREAS, a Registration Rights Agreement dated September 14, 1990, a copy
of which is attached hereto as Exhibit "A", (the "Registration Rights
Agreement") was entered into between Survival Technology, Inc., a Delaware
Corporation (the "Company"), and Robert E. Herzstein, as Personal Representative
of the Estate of Stanley J. Sarnoff (the "Estate"); and
WHEREAS, the Estate has entered into a Stock Purchase Agreement with
Brunswick Biomedical Corporation ("Brunswick") to sell shares of the Company
held by the Estate to Brunswick and the Estate has agreed therein to assign to
Brunswick all of the Estate's rights and interest under the Registration Rights
Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the purchase price
under the Stock Purchase Agreement, the Estate does hereby assign, transfer and
convey to Brunswick Biomedical Corporation all of the Estate's right and
interest in, to and under the Registration Rights Agreement.
Dated: ______________________________________
Robert E. Herzstein, as Personal
Representative of the Estate of
Stanley J. Sarnoff
The undersigned, BRUNSWICK BIOMEDICAL CORPORATION, does hereby acknowledge
receipt of this assignment.
BRUNSWICK BIOMEDICAL CORPORATION
Dated: By:__________________________________
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<PAGE>
EXHIBIT 4(B)
THE WARRANTS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") OR THE SECURITIES LAWS OF ANY
STATE AND NEITHER THE WARRANTS NOR ANY INTEREST THEREIN MAY BE
SOLD OR IN ANY OTHER WAY TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT.
WARRANT TO PURCHASE SHARES OF COMMON STOCK OF
BRUNSWICK BIOMEDICAL CORPORATION
Warrant No. C-29 50,000 Shares
This certifies that, for value received, Robert Herzstein, as Personal
Representative of the Estate of Dr. Stanley J. Sarnoff (the "Holder") is
------
entitled to subscribe for and purchase up to 50,000 shares (subject to
adjustment from time to time pursuant to the provisions of Section 5 hereof) of
fully paid and nonassessable Common Stock of BRUNSWICK BIOMEDICAL CORPORATION, a
Massachusetts corporation (the "Company"), at the Warrant Price (as defined in
-------
Section 2 hereof and subject to adjustment from time to time pursuant to the
provisions of Section 5 hereof), subject to the provisions and upon the terms
and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's presently
------------
authorized Common Stock, $.01 par value per share, and any other capital stock
into or for which such Common Stock may hereafter be converted or exchanged or
that may be issued in respect of, in exchange for, or in substitution of, such
shares by reason of any stock splits, stock dividends, distributions, mergers,
consolidations or other events.
This Warrant (the "Warrant") is issued pursuant to that certain Stock
Purchase Agreement dated March 18, 1996 (the "Purchase Agreement").
1. Term of Warrant. The purchase right represented by this Warrant is
---------------
exercisable, in whole or in part, at any time during the period beginning on
April 15, 1996 (the "Initial Exercise Date") and ending on April 15, 2001.
---------------------
<PAGE>
2. Warrant Price. The exercise price of this Warrant is $27.55 per share
-------------
of Common Stock, subject to adjustment from time to time pursuant to the
provisions of Section 5 hereof (the "Warrant Price").
-------------
3. Method of Exercise; Conversion.
------------------------------
(a) Exercise. Subject to Section 1 hereof and Section 3(b) hereof, the
--------
purchase right represented by this Warrant may be exercised at the option of the
holder hereof, in whole or in part, at any time and from time to time, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Exhibit 1 duly executed) at the principal office of the Company at 6 Thacher
- ---------
Lane, Wareham, Massachusetts 02571 (or such other address of which the Company
may notify the holder hereof in writing), and by either (or any combination of)
(i) the payment to the Company, by check or wire transfer, of an amount equal to
the Warrant Price per share multiplied by the number of shares then being
purchased or (ii) the reduction of the outstanding principal amount of any
indebtedness of the Company to the holder hereof in an amount equal to the
Warrant Price per share multiplied by the number of shares then being purchased
(the promissory note or other evidence of indebtedness held by the holder to be
presented to the Company for notation of the reduction on the face thereof).
The Company agrees that the shares so purchased shall be deemed to be issued to
the holder hereof as the record owner of such shares as of the close of business
on the date on which this Warrant shall have been surrendered and payment made
for such shares as aforesaid or, at the election of the Holder, may be made
contingent upon the closing of the sale of the Company's Common Stock to the
public in the initial public offering pursuant to a registration statement under
the Act. In the event of any exercise of this Warrant, certificates for the
shares of stock so purchased shall be delivered to the holder hereof within 5
days thereafter and, unless this Warrant has been fully exercised or expired, a
new Warrant (containing the same terms and conditions set forth herein)
representing the portion of the shares, if any, with respect to which this
Warrant shall not then have been exercised, less the number of shares as to
which the Conversion Right (as defined below) has been previously exercised,
shall also be issued to the holder hereof within such 5 day period.
(b) Conversion. The Holder may convert this Warrant (the "Conversion
----------
Right"), in whole or in part, into the number of shares (less the number of
shares which have been previously exercised or as to which the Conversion Right
has been previously exercised) calculated pursuant to the following formula at
any time until such Warrant terminates, by surrendering this Warrant with
written notice to the Company specifying the number of shares subject to this
Warrant which the Holder desires to convert:
- 2 -
<PAGE>
X = Y (A - B)
---------
A
where: X = the number of shares to be issued to the Holder;
Y = the number of shares subject to this Warrant for which the
Conversion Right is being exercised;
A = the fair market value of one share of Common Stock;
B = the Warrant Price
As used herein, the "fair market value" of a share of Common Stock shall
mean with respect to each share of Common Stock the last reported sales price
per share of the Company's Common Stock on the principal national securities
exchanges on which the Common Stock is then listed or admitted to trading or, if
not then listed or admitted to trading on any such exchange, on the NASDAQ
National Market System, or if not then listed or traded on any such exchange or
system, the average of the last reported bid and offer price per share on
NASDAQ, in each case averaged over the 10 trading days consisting of the day as
of which the current fair market value of Common Stock is being determined and
the nine consecutive business days prior to such day. If at any time such
quotations are not available, the current fair market value of a share of Common
Stock shall be the highest price per share which the Company could obtain from a
willing buyer for shares of Common Stock sold by the Company, from authorized
but unissued shares, as determined in good faith by the Board of Directors of
the Company which determination shall be described in a resolution of the Board
of Directors of the Company and delivered to the Holder, unless (i) the holder
shall exercise its Conversion Right to purchase such shares between the time of
the execution of any agreement providing for the merger, acquisition or other
consolidation pursuant to which the Company is not the surviving party and the
effective date of such transaction, in which case the current fair market value
of a share of Common Stock shall be deemed to be the value (determined as
aforesaid) of all consideration to be received by the holders of the Company's
Common Stock for each share of Common Stock pursuant to the Company's
transaction, as measured as of the date of exercise (provided, however, that in
the case of a merger of the Company with or into Survival Technology, Inc.
("STI"), the value for purposes of this Section 3(b) shall not be less than the
Warrant Price); or (ii) the Holder shall exercise its Conversion Right to
purchase such shares between the time of the announcement of the initial
underwritten public offering of the Company's Common Stock pursuant to a
registration statement filed under the Act and the closing of sale pursuant to
that offering or such exercise shall be contingent on such closing, in which
case, the fair market value of a share of Common Stock shall be the price per
share at which all registered shares are sold to the public in such offering.
- 3 -
<PAGE>
The Company agrees that the shares issuable upon conversion of this Warrant
shall be deemed for all purposes to be issued to the Holder converting this
Warrant as of the close of business on the date on which the Warrant is
surrendered for conversion or, at the election of the Holder, may be made
contingent upon the closing of the consummation of the sale of the Company's
Common Stock to the public in a public offering pursuant to a registration
statement under the Act. Certificates for the shares so issued upon conversion
of this Warrant shall be delivered to the Holder within a reasonable time, not
exceeding 5 days, after the issuance of such shares. All certificates
representing such shares may bear legends respecting restrictions under
securities laws which normally appear on the Company's certi ficates for shares
issued in private placements. In the event the Holder shall convert this Warrant
in part only, the Company shall deliver to the Holder within a reasonable time,
not exceeding 5 days, after the conversion of the Warrant, a new Warrant (dated
the date hereof and containing the same terms and conditions set forth herein)
in the form of this Warrant to purchase a number of shares equal to the number
of shares which may be purchased under this Warrant minus the number of shares
as to which the Conversion Right has been previously exercised or the number of
shares which have been previously exercised.
4. Stock Fully Paid; Reservation of Shares. All Common Stock which
---------------------------------------
may be issued upon the exercise or conversion of this Warrant will, upon
issuance, be validly issued, fully paid and nonassessable, and free and clear
from all taxes, security interests, encumbrances, liens, charges and preemptive
rights. During the period within which the rights represented by this Warrant
may be exercised, the Company will at all times have authorized, and reserved
for the purpose of the issuance upon exercise of the purchase rights evidenced
by this Warrant, a sufficient number of shares of its Common Stock to provide
for the exercise of the rights in full represented by this Warrant. The Company
shall not by any action including, without limitation, amending its articles of
organization or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, the Company will (a) not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
The Company will pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance or delivery of
any shares of Common Stock upon conversion or exercise of this Warrant.
- 4 -
<PAGE>
5. Adjustments. The Warrant Price and the number of share of Common
-----------
Stock issuable hereunder shall be subject to adjustment from time to time as
follows:
(a) Reclassification, Consolidation or Merger. In case of any
-----------------------------------------
reclassification or change of outstanding securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), or in case of any consolidation or merger of the Company with
or into another corporation, other than a merger with another corporation in
which the Company is a continuing corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant, or in case of any sale of all or substantially all of the assets
of the Company, the Company, or such successor or purchasing corporation, as the
case may be, shall execute a new Warrant, providing that the holder of this
Warrant shall have the right to exercise such new Warrant and procure upon such
exercise, in lieu of each share of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change,
consolidation, or merger by a holder of one share of Common Stock; provided,
however, that if the Company shall merge with or into STI in which the holders
of Common Stock receive common stock of STI, the number of shares of common
stock which the Holder shall have the right to purchase in lieu of each share of
Common Stock theretofore issuable upon exercise of this Warrant shall not be
less than 2.5 shares of common stock of STI (subject to appropriate adjustment
on account of the events set forth in Sections 5(a), (b) and (c) prior to such
merger). Such new Warrant shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
5 and shall otherwise be subject to the same provisions and upon the same terms
and conditions set forth herein. No consolidation or merger of the Company with
or into another corporation referred to in the first sentence of this paragraph
(a) shall be consummated unless the successor or purchasing corporation referred
to above shall have agreed to issue a new Warrant as provided in this Section 5.
The provisions of this subsection (a) shall similarly apply to successive
reclassification, changes, consolidations, mergers and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time
------------------------------------
while this Warrant remains outstanding and unexpired shall subdivide or combine
its Common Stock, the Warrant Price shall be proportionately decreased in the
case of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this Warrant
---------------
is outstanding and unexpired shall pay a dividend with respect to Common Stock
payable in, or make any other distribution with respect to, Common Stock (except
any distribution specifically provided for in the foregoing subparagraphs (a) or
(b)) then the Warrant Price shall be decreased, from and after the date of
determination of shareholders entitled to receive such dividend or distribution,
to that price determined by multiplying the Warrant Price in effect immediately
prior to such date of determination by a fraction (a) the numerator of which
shall be the total number of shares of Common Stock outstanding
- 5 -
<PAGE>
immediately prior to such dividend or distribution and (b) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution.
(d) Rights; Options; Warrants. In case the Company shall issue
-------------------------
rights, options, warrants or convertible or exchangeable securities
("Convertible Securities") to all holders of its Common Stock entitling them to
subscribe for or purchase Common Stock at a price per share that is lower (at
the record date for such issuance) than the fair market value per share of such
Common Stock, (i) the number of shares of Common Stock thereafter issuable upon
the exercise of this Warrant shall be determined by adding the number of shares
of Common Stock theretofore issuable upon exercise of this Warrant to the
product of (x) the Cheap Stock Issued (as defined below), multiplied by (y) the
Ownership Ratio (as defined below), and (ii) the Warrant Price shall be adjusted
by multiplying such Warrant Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of shares purchasable upon
the exercise of each Warrant immediately prior to the adjustment set forth in
clause (i), and of which the denominator shall be the number of Warrant Shares
so purchasable immediately thereafter, provided, however, that the Exercise
Price shall not be reduced below par. Such adjustments shall be made whenever
such rights, options, warrants or convertible or exchangeable securities are
issued, and shall become effective retroactively immediately after the record
date for the determination of stockholders entitled to receive such rights,
options, warrants or convertible or exchangeable securities.
For purposes of this Section 5 (d), the "Cheap Stock Issued" shall be the
------------------
number of additional shares of any Common Stock offered by the Company for
subscription or purchase as described above minus the number of shares of Common
Stock that the aggregate offering price of the total number of shares of Common
Stock so offered would purchase at the then fair market value per share of
Common Stock. The "Ownership Ratio" shall be a fraction, the numerator of which
---------------
shall be the number of shares of Common Stock theretofore issuable upon exercise
of this Warrant, and the denominator of which shall be the number of shares of
Common Stock then outstanding on the date of issuance of (and entitled to
receive) such rights, options, warrants or convertible or exchangeable
securities.
(e) Distributions of Debt, Assets or Securities. In case the Company
-------------------------------------------
shall fix a record date for the making of a distribution to all holders of
shares of its Common Stock of evidences of indebtedness of the Company, assets
(other than cash dividends payable out of earnings and profits arising after the
date hereof) or securities (excluding those referred to in paragraphs (a) - (d)
of this Section 5) (any such evidences of indebtedness, assets or securities,
the "assets or securities"), then in each case the Holder, upon the exercise of
--------------------
this Warrant, shall be entitled to receive in addition to the shares then
issuable under this Warrant, (i) the assets or securities to which such Holder
would have been entitled as a holder of Common Stock if such Holder had
exercised this Warrant immediately prior to the record date for such
distribution and (ii) any income earned on the assets or securities distributed
from the distribution date to the date of exercise or conversion, as the case
may be, less the Warrant Price then in effect. At the time of any such
distribution, the Company
- 6 -
<PAGE>
shall either (A) deposit the assets or securities payable to the Holder pursuant
hereto in trust for the Holder with an "eligible institution" with instructions
as to the investment of such property and any proceeds therefrom so as to
protect the value of such property for the Holder or (B) distribute to the
Holder the assets or securities to which it would be entitled upon exercise and,
upon any such distribution pursuant to this clause (B), the provisions of this
paragraph (e) shall no longer apply to such event. Such election shall be made
by the Company giving written notice thereof to the Holder.
For purposes of this subsection 5(e), the term "eligible institution" shall
mean a corporation organized and doing business under the laws of the United
States of America or of any state thereof, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by Federal or state
authority.
(f) Sale of Convertible Securities. If and whenever the Company
------------------------------
shall issue, grant or sell Convertible Securities (unless the provisions of
subsection 5(d) shall be applicable, in which event this subsection 5(f) shall
not apply), there shall be determined the price per share for which shares of
Common Stock are issuable upon the conversion or exchange thereof, such
determination to be made by dividing (a) the total amount received or receivable
by the Company as consideration for the issue or sale of such Convertible
Securities, plus the average of the maximum and minimum aggregate amount of
additional consideration, if any, payable to the Company upon the conversion or
exchange of all such Convertible Securities by (b) the maximum number of shares
of Common Stock of the Company issuable upon Conversion or exchange of all of
such Convertible Securities; and such issue or sale shall be deemed to be an
issue or sale for cash (as of the date of issue or sale of such Convertible
Securities) of such maximum number of shares of Common Stock at the price per
share so determined.
If such Convertible Securities shall by their terms provide for an increase
or increases, with the passage of time, in the amount of additional
consideration if any, payable to the Company, or in the rate of exchange, upon
the conversion or exchange thereof, the adjusted Warrant Price shall, forthwith
upon any such increase becoming effective, be readjusted (but to no greater
extent than originally adjusted) to reflect the same.
(g) Sales Below Market Price. If and whenever the Company shall
------------------------
issue or sell its shares of Common Stock, or be deemed to have issued or sold
Common Stock pursuant to the provisions of subsection 5(f) above, for the
consideration per share which is below the then fair market value per share for
its shares of Common Stock (unless the provisions of subsections 5(a)-5(e) shall
be applicable, in which event this subsection 5(g) shall not apply), the
following provisions shall apply. An "Adjusted Fair Market Value" shall be
computed (to the nearest cent, a half cent or more being considered a full cent)
by dividing:
- 7 -
<PAGE>
(i) the sum of (x) the result obtained by multiplying the
number of shares of Common Stock of the Company outstanding
immediately prior to such issue or sale by the then fair market value,
plus (y) the consideration, if any, received or deemed received by the
Company upon such issue or sale, by
(ii) the number of shares of Common Stock of the Company
outstanding and deemed to be outstanding immediately after such issue
or sale.
The resulting number shall be deemed to be the Adjusted Fair Market Value
per share. Thereafter the Warrant Price shall be adjusted to be equal to the
product of the Warrant Price in effect immediately prior to such actions,
multiplied by a fraction the numerator of which is the Adjusted Fair Market
Value per share and the denominator of which is the fair market value per share
immediately prior to such actions. Upon any such adjustment of the Warrant
Price, the number of shares of Common Stock acquirable upon exercise of this
Warrant will be adjusted to the number of shares determined by multiplying the
Warrant Price in effect immediately prior to such adjustment by the number of
shares of Common Stock acquirable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product thereof by the Warrant Price
resulting from such adjustment.
(h) Adjustment of Number of Shares. Upon each adjustment in the
------------------------------
Warrant Price pursuant to Section 5 (a), (b) or (c), the number of shares of
Common Stock purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of shares purchasable
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately prior to such
adjustment and the denominator of which shall be the Warrant Price immediately
thereafter.
(i) Circumstances with no Adjustment. Notwithstanding any provision
--------------------------------
of subsections 5(a) - (g), no adjustment of the Warrant Price or number of
shares of Common Stock issuable hereunder shall be made on account of:
(i) the issue of any shares of Common Stock upon the
conversion of any shares of Preferred Stock of the Company issued and
outstanding on April 15, 1996;
(ii) the issue of any shares of Common Stock upon the exercise
of any warrants issued by the Company on or prior to April 15, 1996;
(iii) the issue of any shares of Common Stock to officers,
directors or employees of, or consultants to, the Company upon the
exercise of any stock option granted prior to April 15, 1996, or
pursuant to a stock purchase or option plan or other employee or
director stock incentive or compensation program approved in good
faith by the Board of Directors of the Company; or
- 8 -
<PAGE>
(iv) the actual issue of any Convertible Securities or shares
of Common Stock upon the exercise, conversion or exchange of any
Convertible Securities subject to subsections 5 (d), (e) or (f).
6. Notice of Adjustments. Whenever any adjustment may be made pursuant
---------------------
to Section 5 hereof, the Company shall promptly prepare a certificate signed by
its chief financial officer setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, the Warrant Price after giving effect to such
adjustment and the number of shares then purchasable upon exercise of this
Warrant, and shall cause copies of such certificate to be promptly mailed (by
first class mail, postage prepaid) to the holder of this Warrant at the address
specified in Section 10(d) hereof, or at such other address as may be provided
to the Company in writing by the holder of this Warrant.
7. Fractional Shares. No fractional shares of Common Stock will be
-----------------
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor upon the basis of the
Warrant Price then in effect.
8. Compliance with the Act.
-----------------------
(a) Compliance with the Act. The holder of this Warrant, by
-----------------------
acceptance hereof, agrees that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for such holder's own account for
investment with no intention of making or causing to be made any public
distribution of all or any portion thereof; and such securities may not be
pledged, sold or in any other way transferred in the absence of an effective
registration statement for such securities under the Act and registration of
such securities under applicable state securities laws or (i) registration under
applicable state securities laws is not required and (ii) an opinion of counsel
reasonably satisfactory to the Company is furnished to the Company to the effect
that registration under the Act is not required.
(b) Restrictive Legend. The Warrants and each certificate
------------------
representing (i) shares of the Company's Common Stock issuable upon exercise of
the Warrants, or (ii) any other securities issued in respect of the Warrants or
the Common Stock issued upon exercise of the Warrants, upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted or unless the securities evidenced by such
certificate shall have been registered under the Act) be stamped or otherwise
imprinted with a legend in such form as counsel for the Company may deem
necessary reflecting the provisions of Section 8(a). Upon request of a holder of
such a certificate, the Company shall remove the foregoing legend from the
certificate or issue to such holder a new certificate therefor free of any
transfer legend, if, with such request, the Company shall have received the
opinion referred to in Section 8(a) to the effect that any transfer by such
holder or the securities evidenced by such certificate will not violate the Act.
- 9 -
<PAGE>
9. Transfer and Exchange of Warrant.
--------------------------------
(a) Transfer. This Warrant may be transferred or succeeded to by any
--------
person; provided however, that the Company is given written notice by the
-------- -------
transferee at the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which such rights are
being assigned.
(b) Exchange. Subject to compliance with the terms hereof, this
--------
Warrant and all rights hereunder are transferable, in whole or in part, at the
office of the Company by the holder hereof in person or by duly authorized
attorney, upon surrender of this Warrant properly endorsed. Each taker and
holder of this Warrant, by taking or holding the same, consents and agrees that
this Warrant, when endorsed in blank, shall be deemed negotiable; provided, that
the last holder of this Warrant as registered on the books of the Company may be
treated by the Company and all persons dealing with this Warrant as the absolute
owner hereof for any purposes and as the person entitled to exercise the rights
represented by this Warrant or to transfer hereof on the books of the Company,
any notice to the contrary notwithstanding, unless and until such holder seeks
to transfer registered ownership of this Warrant on the books of the Company and
such transfer is effected.
10. Registration Rights.
-------------------
(a) Certain Definitions. As used in this Section 10, the
-------------------
following terms shall have the following meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Act.
"Restricted Securities" shall mean the securities of the Company
required to bear or bearing the legend set forth in Section 8(b).
"Registrable Securities" shall mean (i) shares of Common Stock issued
or issuable pursuant to the exercise of the Warrant and (ii) any Common Stock
issued in respect of securities issued pursuant to the exercise of the Warrant
upon any stock split, stock dividend, recapitalization or similar event.
The terms "register," "registered" and "registrations" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Act and applicable rules and regulations thereunder and the
declaration of ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement by the Company and its
subsidiaries, including, without limitation (i) all SEC, stock exchange, NASD
and other registration, listing and filing fees, (ii) all fees and expenses
incurred in connection with compliance with
- 10 -
<PAGE>
state securities or blue sky laws and compliance with the rules of the NASD or
any stock exchange (including reasonable fees and disbursements of counsel in
connection with such compliance and the preparation of a blue sky memorandum and
legal investment survey), (iii) all expenses of any persons in preparing or
assisting in preparing, printing, distributing, mailing and delivering any
Registration Statement, any Prospectus, any underwriting agreements, transmittal
letters, securities sales agreements, securities certificates and other
documents relating to the performance of and compliance with this Agreement,
(iv) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses of any
"cold comfort" letters required by or incident to such performance and
compliance, (v) the fees and expenses of any trustee, transfer agent, registrar,
escrow agent or custodian, (vi) the fees and expenses of any special experts or
other persons retained by the Company in connection with any Registration
Statement, (vii) the expenses incurred in connection with making road show
presentations and holding meetings with potential investors to facilitate the
distribution and sale of Registrable Securities which are customarily borne by
the issuer, (viii) all internal expenses of the Company (including all salaries
and expenses of officers and employees performing legal or accounting duties,
(ix) expenses, fees and disbursements of a single counsel for all the selling
Holders and other security holders, and (x) the expense of any special audits
incident to or required by any such registration.
"Holder" shall mean any holder of the outstanding Registrable
Securities which have not been sold to the public.
"Initiating Holders" shall mean any Holder or Holders who in the
aggregate hold forty percent (40%) or more of the outstanding Registrable
Securities.
"Other Shareholders" shall mean any holders of securities of the
Company who are entitled, by agreement with the Company, to have securities
included in a requested registration of securities of the Company.
(b) Request for Registration. If the Company shall receive from
------------------------
Initiating Holders, at any time or times a written request that the Company
effect any registration with respect to all or a part of the Registrable
Securities, and at such time the Company is eligible to register its securities
on Form S-3, the Company will:
(i) promptly give written notice of the proposed registration
to all other Holders at least 45 days prior to the date the Company
anticipates the initial filing of the registration statement covering
the Registrable Securities so requested to be registered; and
(ii) as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, the execution
of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws
and appropriate compliance with applicable
- 11 -
<PAGE>
regulations issued under the Act) as may be so requested and which
would permit or facilitate the sale and distribution of all or such
portion of such Registrable Securities as are specified in such
request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are
specified in a written request given within 30 days after receipt of
such written notice from the Company; provided that the Company shall
not be obligated to effect, or to take any action to effect, any such
registration pursuant to Sections 10(b) and (c):
(1) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of
process in effecting such registration, qualification or
compliance, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Act or
applicable rules or regulations thereunder; or
(2) After the Company has effected two such registrations
pursuant to this Section 10(b) and such registrations have been
declared or ordered effective by the Commission and the sales of
such Registrable Securities shall have closed.
Subject to the foregoing clauses (i) and (ii), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
The registration statement filed pursuant to the request of the Initiating
Holders may, subject to the provisions of Section 10(c), include securities of
the Company for its own account, or other securities of the Company which are
held by officers or directors of the Company or which are held by persons who,
by virtue of agreements with the Company, are entitled to include their
securities in any such registration.
(c) Requested Registration - Underwriting. If the Initiating Holders
-------------------------------------
intend to distribute the Registrable Securities covered by their request by
means of an underwriting, they shall so advise the Company as a part of their
request made pursuant to Sections 10(b) and (c) and the Company shall include
such information in the written notice referred to in Section 10(b)(i). The
right of any Holder to registration pursuant to Sections 10(b) and (c) shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder with respect to such participation and inclusion) to the extent
provided herein. A Holder may elect to include in such underwriting all or a
part of the Registrable Securities it holds.
If officers or directors of the Company holding other securities of the
Company shall request inclusion in any registration pursuant to Sections 10(b)
and (c), or if Other
- 12 -
<PAGE>
Shareholders request such inclusion, the Initiating Holders shall, on behalf of
all Holders, offer to include the securities of such officers, directors and
Other Shareholders in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Section 10. The Company
shall (together with all Holders, officers, directors and Other Shareholders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders and reasonably acceptable to the Company. If
the representative of the underwriter advises the Initiating Holders in writing
that marketing factors require a limitation on the number of shares to be
underwritten, the Initiating Holders shall so advise all Holders of Registrable
Securities and officers, directors and Other Shareholders whose securities would
otherwise be underwritten pursuant to the request described herein, and the
number of shares of Registrable Securities and other securities that may be
included in the registration and underwriting shall be allocated among all such
Holders, officers, directors and Other Shareholders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and other
securities which they had requested to be included in such registration at the
time of filing the registration statement. No Registrable Securities or any
other securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration.
If any Holder of Registrable Securities, officer, director or Other
Shareholder who has requested inclusion in such registration as provided above
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the underwriter and the Initiating
Holders. The securities held by such person shall then be withdrawn from
registration. If the underwriter has not limited the number of Registrable
Securities or other securities to be underwritten, the Company may include its
securities for its own account in such registration if the underwriter so agrees
and if the number of Registrable Securities and other securities which would
otherwise have been included in such registration and underwriting has not
thereby been limited.
(d) Company Registration. If the Company shall determine to register
--------------------
any of its securities either for its own account or the account of a security
holder or holders exercising their respective demand registration rights, other
than a registration relating solely to a Commission Rule 145 transaction, or a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities, the Company will:
(i) promptly (and in no event later than at least 45 days
before the initial filing with the Commission of the Registration
Statement) give to each Holder written notice thereof which shall
include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or
other state securities laws; and
- 13 -
<PAGE>
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made by any Holder within
20 days after receipt of the written notice from the Company described
in clause (i) above, except as set forth in Section 10(e). Such
written request may specify that all or a part of a Holder's
Registrable Securities be included in the Company's registration.
(e) Company Registration - Underwriting. If the registration of
-----------------------------------
which the Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 10(d)(i). In such event the right of any Holder
to registration pursuant to this Section 10 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the Other Shareholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for underwriting by
the Company. If the underwriter determines that marketing factors require a
limitation on the number of shares to be underwritten, and (i) if such
registration is the first registered offering of the Company's securities to the
Public, the underwriter may (subject to the allocation set forth below) exclude
from such registration and underwriting some or all of the Registrable
Securities which would otherwise be underwritten pursuant to the notice
described herein, and (ii) if such registration is other than the first
registered offering of the sale of the Company's securities to the public, the
underwriter may (subject to the allocation set forth below) limit the number of
Registrable Securities and the securities of all Other Shareholders to be
included in the registration and underwriting to not less than fifty percent
(50%) of the securities included therein (based on aggregate market values). The
Company shall advise all holders of securities requesting registration promptly
after such determination by the underwriter, and the number of shares of
securities that are entitled to be included in the registration and underwriting
shall be allocated in the following manner: The number of shares that may be
included in the registration and underwriting shall be allocated among all such
Holders, officers, directors and Other Shareholders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and other
securities which they had requested to be included in such registration at the
time of filing the registration statement. If any Holder of Registrable
Securities or any officer, director or Other Shareholder disapproves of the
terms of any such underwriting, he may elect to withdraw therefrom by written
notice to the Company and the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
(f) Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration, qualification or compliance pursuant to this
Section 10 shall be borne by the Company. Each Holder shall pay all underwriting
discounts and selling commissions relating to the sale of such Holder's
Registrable Securities pursuant to such
- 14 -
<PAGE>
Registration and the fees and expenses of the selling Holder's own counsel
(other than the counsel selected to represent all selling Holders) shall be
borne by the holders of the securities so registered pro rata on the basis of
the number of their shares so registered; provided, however, that the Company
shall not be required to pay any Registration Expenses if, as a result of the
withdrawal of a request for registration by Initiating Holders, the registration
statement does not become effective, in which case the Holders and Other
Shareholders who requested registration shall bear such Registration Expenses
pro rata on the basis of the number of their shares so included in the
registration request, and provided, further, that such registration shall not be
counted as a requested registration pursuant to Section 10(b)(ii)(2).
(g) Registration on Form S-3. The Company shall use its best efforts
------------------------
to qualify for registration of its securities on Form S-3 or any comparable or
successor form or forms; the Company shall register (whether or not required by
law to do so) the Common Stock under the Exchange Act in accordance with the
provisions thereof, following the effective date of the first registration of
any securities of the Company on Form S-1 or Forms SB-1 or SB-2 or any
comparable or successor form or forms.
(h) Registration Procedures. In the case of each registration
-----------------------
effected by the Company pursuant to this Section 10, the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. In addition at its expense, the Company will as
expeditiously as possible:
(i) Prepare and file with the Commission a Registration
Statement with respect to such securities on any form for which the
Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of the
Registrable Securities to be registered thereunder in accordance with
the intended method of distribution thereof, and use its best efforts
to cause such filed registration statement to become effective;
provided that after the filing of the registration statement, the
--------
Company will promptly notify each Selling Holder of Registrable
Securities covered by such registration statement of any stop order
issued or threatened by the Commission and take all reasonable actions
required to prevent the entry of such stop order or to remove it if
entered;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of six months; provided, however,
that in the case of any registration of Registrable Securities on Form
S-3 which are intended to be offered on a continuous or delayed basis,
such six-month period shall be extended, if necessary, to keep the
registration statement effective until all such Registrable Securities
are sold; provided that Rule 415, or any successor rule under the Act,
permits an offering on a continuous or delayed basis, and
- 15 -
<PAGE>
provided further that applicable rules under the Act governing the
obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (A) includes any prospectus
required by Section 10(a)(3) of the Act or (B) reflects facts or
events representing a material or fundamental change in the
information set forth in the registration statement, the incorporation
by reference of information required to be included in (A) and (B)
above to be contained in periodic reports filed pursuant to Section 13
or 15(d) of the Exchange Act in the registration statement;
(iii) furnish, without charge, such number of prospectuses and
such other documents as a Holder from time to time may reasonably
request;
(iv) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions within the United States and
Puerto Rico as each holder of such securities shall request (provided,
however, the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in which
it is not then qualified or to file any general consent to service of
process), and do such other reasonable acts and things as may be
required of it to enable such holder to consummate the disposition in
such jurisdiction of the securities covered by such Registration
Statement;
(v) notify each such Holder of such Registrable Securities, at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of an event
which may require the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and promptly make available to each such Holder
any such supplement or amendment;
(vi) in the event such sale is pursuant to an underwritten
offering, use its best efforts to obtain a comfort letter or comfort
letters from the Company's independent public accountants in customary
form and covering such matters of the type customarily covered by
comfort letters as the Holders of a majority of the shares of
Registrable Securities being sold or the managing underwriter,
reasonably requests;
(vii) use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed;
- 16 -
<PAGE>
(viii) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are
customary and appropriate in order to expedite or facilitate the
disposition of such Registrable Securities; and
(ix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12 months beginning
within three months after the effective date of such Registration
Statement, which earnings statements shall satisfy the provisions of
Section 11(a) of the Securities Act.
(i) Indemnification.
---------------
(i) The Company will indemnify each Holder, each of its officers,
directors and partners, and each person who controls such Holder, on whose
behalf registration, qualification or compliance has been effected pursuant to
Section 10, and each underwriter, if any, and each person who controls any
underwriter (within the meaning of the Act and the rules and regulations
thereunder) against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will reimburse each
such Holder, each of its officers, directors and partners, and each person who
controls such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action; provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises from or is based on any untrue statement or omission or alleged untrue
statement or omission based upon written information furnished to the Company by
such Holder or underwriter and stated to be specifically for use therein.
(ii) Each Holder will, if Registrable Securities held by it are
included in the securities as to which such registration, qualification or
compliance is being effected, and each Other Shareholder who has the right to
register its securities pursuant to Section 10 will be required by the Company
to severally, indemnify the Company, each of its directors and officers and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter (within the
meaning of the Act and the rules and regulations thereunder) each other such
Holder and Other Shareholder and each of their officers, directors and partners,
and each person who
- 17 -
<PAGE>
controls such Holder or Other Shareholder, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will severally reimburse the Company and such Holders, Other
Shareholders, directors, officers, partners, persons, underwriters or
controlling persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder or Other Shareholder and stated to be
specifically for use therein; provided, however, that the obligations of such
Holders and Other Shareholders hereunder shall be limited to an amount equal to
the proceeds to each such Holder or Other Shareholder of securities sold as
contemplated herein.
(iii) Each party entitled to indemnification under this Section 10(k)
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent the
Indemnifying Party is actually prejudiced. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party (which consent shall not unreasonably be withheld), consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with defense of
such claim and litigation resulting therefrom.
(j) Information by Holder. Each Holder of Registrable Securities,
---------------------
and each Other Shareholder holding securities included in any registration,
shall furnish to the Company such information regarding such Holder or Other
Shareholder and the distribution proposed by such Holder or Other Shareholder as
the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Section 10.
- 18 -
<PAGE>
(k) Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the Commission which may permit the sale of
the Restricted Securities to the public without registration, the Company agrees
to:
(i) Make and keep public information available as those terms
are understood and defined in Rule 144 under the Act (and any
successor rule to Rule 144) at all times from and after 90 days
following the effective date of the first registration statement under
the Act filed by the Company for an offering of its securities to the
public; and
(ii) File with the Commission in a timely manner all reports
and other documents required of the Company under the Act and the
Exchange Act at any time after it has become subject to such reporting
requirements.
(l) Transfer or Assignment of Registration Rights. The rights to
---------------------------------------------
cause the Company to register the Registrable Securities granted by the Company
under Sections 10(b), (c), (d), (e) and (g) may be transferred or assigned by a
Holder to a transferee or assignee of any of the Holder's Restricted Securities;
provided that the Company is given written notice by a Holder at the time of or
within a reasonable time after said transfer or assignment, stating the name and
address of said transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned and
provided further that the transferee or assignee of such rights assumes the
obligations of such Holder under Section 10.
11. Miscellaneous.
-------------
(a) No Rights as Shareholder. Except as provided in the Agreement,
------------------------
no holder of the Warrant shall be entitled to vote or receive dividends or be
deemed the holder of Common Stock or any other securities of the Company which
may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the holder of this
Warrant, as such, any of the rights of a shareholder of the Company or any right
to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
(b) Replacement. On receipt of evidence reasonably satisfactory to
-----------
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity
agreement, or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and
- 19 -
<PAGE>
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu of this Warrant, a new Warrant of like tenor and for a like
number of underlying shares.
(c) Notice of Capital Changes. In case:
-------------------------
(i) the Company shall declare any dividend or distribution
payable to the holders of its Common Stock;
(ii) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with, or sale of all or substantially all of its assets to,
another corporation or business organization; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give the holder of
this Warrant written notice, in the manner set forth in subparagraph (d) below,
of the date on which a record shall be taken for such dividend, or distribution
or for determining shareholders entitled to vote upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and of the date when any such transaction shall take place, as the
case may be. Such written notice shall be given at least 30 days prior to the
transaction in question and not less than 20 days prior to the record date in
respect thereof.
In case at any time the Company shall file a registration statement on Form
S-1 or the then equivalent form covering the offer and sale by the Company of
its Common Stock under the Act, in a public offering, then the Company shall
give at least 20 days' prior written notice of the earliest date on which such
registration statement may become effective.
(d) Notice. Any notice given to either party under this Warrant
------
shall be in writing, and any notice hereunder shall be deemed to have been given
upon the earlier of delivery thereof by hand delivery, by courier, or by
standard form of telecommunication or three (3) business days after the mailing
thereof if sent registered mail with postage prepaid, addressed to the Company
at its principal executive offices and to the holder at its address set forth in
the Company's books and records or at such other address as the holder may have
provided to the Company in writing.
(e) No Impairment. The Company will not, by amendment of its
-------------
Restated Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions in
the Warrant.
- 20 -
<PAGE>
(f) Governing Law. This Warrant shall be governed by and construed
-------------
under the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this Warrant is executed as of this 15th day of April,
1996.
BRUNSWICK BIOMEDICAL CORPORATION
By: /s/ James H. Miller
----------------------------------------
Title: President
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<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE
TO: BRUNSWICK BIOMEDICAL CORPORATION
1. The undersigned hereby elects to purchase _________ shares of Common
Stock of BRUNSWICK BIOMEDICAL CORPORATION pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
___________________________________________
(Name)
___________________________________________
___________________________________________
(Address)
3. The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares.
___________________________________________
Signature
- 22 -
<PAGE>
EXHIBIT 4(C)
BRUNSWICK BIOMEDICAL CORPORATION
Subordinated Promissory Note
Wareham, Massachusetts
April 15, 1996
ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED, PURSUANT TO AND TO THE
EXTENT PROVIDED IN SECTION ONE HEREOF, TO ALL SENIOR DEBT, AS DEFINED THEREIN.
Brunswick Biomedical Corporation (the "Company"), a Massachusetts
corporation, for value received, hereby promises to pay to Robert Herzstein, as
Personal Representative of the Estate of Dr. Stanley J. Sarnoff (together with
his successors and assigns, the "Payee"), in lawful money of the United States
of America, the principal amount of FOUR MILLION SEVEN HUNDRED THOUSAND DOLLARS
($4,700,000.00), together with such additional amount as may be added to
principal on account of deferred interest pursuant to the next paragraph, on or
before the earlier of (i) the fifth anniversary of any merger or consolidation
(a "Merger") of the Company with or into any other entity as a result of which
the shareholders of the Company receive capital stock or securities convertible
into capital stock registered under the Securities Exchange Act of 1934, or (ii)
December 31, 2001 (such earlier date, the "Maturity Date").
The Company further agrees to pay interest in like money on the principal
amount hereof from time to time outstanding at a rate per annum equal to the
Applicable Rate (as defined herein) in effect from time to time. Interest shall
be computed on the basis of the actual days. Interest accruing on this Note from
the date hereof through April 30, 1998 shall be added to the principal amount of
this Note on the last day of each calendar month, and shall bear interest
thereafter at the Applicable Rate until paid. Interest accruing on this Note
after April 30, 1998 shall be payable in cash quarterly in arrears on the last
day of each calendar quarter. Interest on this Note shall also be payable upon
payment in full of the unpaid principal amount hereof, pursuant to a mandatory
prepayment or otherwise.
If any payment becomes due hereunder on a day which is not a Business Day
(as defined herein), the maturity thereof shall be extended to the next
succeeding Business Day and interest on any payment of principal so extended
shall be payable at the then Applicable Rate during such extension.
This Note is secured by a pledge of the shares of capital stock of STI
owned by the Company, junior and subordinate to the pledge securing Senior Debt.
<PAGE>
SECTION ONE
Subordination of Note
---------------------
1.01 Subordination. Anything in this Note to the contrary
-------------
notwithstanding, the indebtedness evidenced by this Note shall be subordinate
and junior in right of payment, to the extent and in the manner hereinafter set
forth, to the prior payment in full in cash of any and all Senior Debt (as
herein defined) now existing or hereafter arising. "Senior Debt" shall mean the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition in bankruptcy, whether or not such
interest constitutes an allowed claim), fees, indemnities, amounts reimbursable,
expenses, costs of enforcement and other amounts (including, without limitation,
obligations of the Company in respect of interest rate hedging obligations)
payable with respect to, any indebtedness under (a) the following credit
facilities to be provided by Internationale Nederlanden (U.S.) Capital
Corporation (the "Initial Senior Lender") to the Company: (i) a bridge loan
facility in the maximum principal amount of $11,000,000; (ii) a term loan in the
maximum principal amount of $11,000,000 to refinance in full the bridge loan
upon consummation of the Merger; and (iii) a $5,000,000 revolving credit
facility to refinance in full all indebtedness of STI outstanding as of the
Merger; (b) additional indebtedness for borrowed money not to exceed $3,000,000
in outstanding principal amount that recites that it is senior to this Note; and
(c) any and all extensions, refinancings, renewals, replacements, refundings,
modifications, amendments and restatements of Senior Debt described in clauses
(a), (b) or (c) of this definition or any indebtedness that is incurred pursuant
to a credit commitment under a credit facility that refinances, replaces or
refunds, in whole or in part, indebtedness or unfunded commitments under credit
facilities described in clauses (a), (b) or (c) of this definition. The holder
or holders from time to time of any Senior Debt are hereinafter referred to
individually or collectively, as the context permits, as the "Senior Lender".
1.02 Prohibited Actions. Until the Senior Debt shall have been
------------------
indefeasibly paid in full in cash, the holder of this Note shall not without the
prior written consent of the Senior Lender (a) after the occurrence of a default
in any of the Senior Debt take action to execute, seize or otherwise collect
upon any assets of the Company pursuant to any judgment or decree of a court of
law or equity or any non-judicial remedy until the earlier of (i) the date upon
which the default in such Senior Debt has been cured to the satisfaction of the
Designated Senior Lender or waived by the Designated Senior Lender in writing or
(ii) one year after the Senior Lender shall have given notice to the Company of
such default, if the Designated Senior Lender shall not have accelerated the
maturity of the Senior Debt and such default is not a payment default; or (b)
accept from or on behalf of the Company money or property of any sort in whole
or partial satisfaction of any indebtedness evidenced by this Note, or accept
any prepayment of this Note, other than stock or other equity interests in the
Company or indebtedness of the Company that has been subordinated to all Senior
Debt upon the same terms as this Note or terms otherwise acceptable to the
Senior Lender, except that the holder of this Note may accept regularly
scheduled interest payments (the "Periodic Payments") described above and the
mandatory prepayment described in Section 4 and principal and interest due with
respect to this Note on the Maturity Date, in each case, to the
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<PAGE>
extent the Company is not prohibited from making such payments under subsections
1.03 or 1.04 below.
1.03 Default of Senior Debt. Upon receipt by the Company of written
----------------------
notice given by the Designated Senior Lender of a default in any of the Senior
Debt, the holder of this Note no longer shall be entitled to receive or accept
any payments hereunder, whether Periodic Payments or otherwise, and the holder
shall hold the same in trust as trustee for the benefit of the Senior Lender and
turn over to the Designated Senior Lender any such payments (other than shares
of stock of the Company, or indebtedness of the Company that has been
subordinated to all Senior Debt upon the same terms as this Note or terms
otherwise acceptable to the Senior Lender, distributed to it to settle any claim
described in subsection 1.04 below) it may obtain after the occurrence of such
default in the form received and after receiving the Designated Senior Lender's
aforesaid notice of default. Such prohibition shall continue until the earliest
date upon which (i) the default has been cured to the satisfaction of the
Designated Senior Lender or waived by the Designated Senior Lender in writing,
(ii) if such default is not a payment default and the Designated Senior Lender
within one year after giving notice to the Company of the default shall not have
accelerated the maturity of the Senior Debt, or (iii) all Senior Debt has been
paid in full. Notwithstanding the foregoing, the Designated Senior Lender may
invoke such prohibition no more than once during any consecutive 24 month
period, unless a payment default shall have occurred and is continuing. The
Company shall promptly notify the Payee, or any subsequent holder of which the
Company has received notice and an address, of the Company's receipt of such a
notice from the Designated Senior Lender. All such notices from the Designated
Senior Lender shall be deemed to have been duly delivered only (i) at the time
delivered by hand, if personally delivered, (ii) when received, if deposited in
the mail, first-class postage prepaid, return receipt requested, (iii) when
transmission is verified, if telecopied, and (iv) on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery. The term
"Designated Senior Lender" shall initially mean the Initial Senior Lender and,
subsequent to the refinancing in full of the Senior Debt described in clauses
(a)(ii) and (iii) of the definition of Senior Debt set forth in subsection 1.01,
Designated Senior Lender shall mean any lender (or lenders acting collectively)
that hold(s) Senior Debt having an aggregate outstanding principal amount and
aggregate outstanding commitment(s) of not less than $5,000,000 or any trustee,
agent or representative of such lender or lenders, the name and address of whom
shall have been given to the Company by the preceding Designated Senior Lender.
1.04 Liquidation Claims. If there shall occur any receivership,
------------------
insolvency, assignment for the benefit of creditors, bankruptcy (voluntary or
involuntary), reorganization, or arrangements with creditors (whether or not
pursuant to bankruptcy or other insolvency laws), sale of all or substantially
all of the assets, dissolution, liquidation, or any other marshalling of the
assets and liabilities of the Company (any of the foregoing, a "Liquidation
Event"), (i) the Senior Lender shall be entitled to receive payment in full in
cash of all Senior Debt then outstanding before the holder of this Note shall be
entitled to receive any payment or distribution, whether in cash, securities
(other than an equity interest in the Company, or indebtedness of the Company
that has been subordinated to all Senior Debt upon the same terms as this Note
or terms otherwise acceptable to the Senior Lender,
- 3 -
<PAGE>
distributed in settlement of claims described in this subsection 1.04) or other
property, in respect of the principal of, interest on or other amounts due with
respect to this Note at the time outstanding, (ii) any payment or distribution,
whether in cash, securities (other than an equity interest in the Company, or
indebtedness of the Company that has been subordinated to all Senior Debt upon
the same terms as this Note or terms otherwise acceptable to the Senior Lender,
distributed in settlement of claims described in this subsection 1.04) or other
property which would otherwise (but for this subsection 1.04) be payable or
deliverable in respect of the amounts due under this Note shall be paid or
delivered directly to the Senior Lender (ratably according to the aggregate
amounts remaining unpaid on account of the Senior Debt held by each such Senior
Lender) or to a trustee or other representative for the Senior Lender, (iii) the
holder of this Note agrees to hold for the account of the Senior Lender any and
all payments and distributions received by such holder which may be payable or
deliverable upon or with respect to this Note, to file appropriate claims or
proofs of claim in respect of this Note and to execute and deliver to the Senior
Lender such powers of attorney, assignments and other instruments as the Senior
Lender may reasonably request to enable it to enforce any and all claims upon or
in respect of this Note (other than voting rights in any such proceeding), and
(iv) the Senior Lender is hereby irrevocably authorized and empowered (in its
name or in the name of the holder of this Note or otherwise) to take any of the
actions described in clause (iii) above upon the failure of the holder promptly
to take any such actions. The consolidation of the Company with, or the merger
of the Company into, another corporation or the liquidation or dissolution of
the Company following the sale, conveyance or lease of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided below shall not be deemed a dissolution, winding up,
liquidation or reorganization for the purposes of this subsection 1.04 if such
consolidation, merger, sale, conveyance or lease does not violate the provisions
of the Senior Debt or any agreement pursuant to which the Senior Debt is issued.
Any payment or distribution, whether in cash, securities (other than an equity
interest in the Company, or indebtedness of the Company that has been
subordinated to all Senior Debt upon the same terms as this Note or terms
otherwise acceptable to the Senior Lender, distributed in settlement of claims
described in this subsection 1.04) or other property received by the holder of
this Note in contravention of any of the terms of this subsection 1.04 shall be
received and held by the holder of this Note in trust as trustee for the benefit
of the Senior Lender and shall be promptly turned over to the Senior Lender (pro
---
rata in accordance with the Senior Debt held by them or as they may otherwise
- ----
direct if there is more than one Senior Lender) for application to the payment
of Senior Debt.
1.05 Judgments. If at any time hereafter the holder of this Note obtains
---------
a judgment against the Company for the indebtedness evidenced by this Note, such
judgment shall be subject to the subordination rights of the Senior Lender to
the same extent as is this Note.
1.06 Modifications. The subordination rights of the Senior Lender, and
-------------
the obligations of the holder of this Note under this Section One, shall be
effective and binding upon any modification, extension, or replacement note of
or for this Note and may not be modified or cancelled without the written
consent of the Senior Lender.
- 4 -
<PAGE>
1.07 Subrogation. Upon the repayment in full in cash of all Senior Debt
-----------
at the time outstanding, the holder of this Note shall be subrogated to the
rights of the Senior Lender (to the extent of payments or distributions
previously made to the Senior Lender pursuant to the provisions of this Section
One) to receive payments or distributions of assets of the Company applicable to
the Senior Debt until this Note shall be repaid in full. No payment over
pursuant to the provisions of this Section One to the Senior Lender by the
holder of this Note and for the purposes of such subrogation, no payments or
distributions to the Senior Lender of any cash, property or securities to which
the holder of this Note would be entitled except for the provisions of this
Section One, shall, as between the Company, its creditors other than the Senior
Lender and the holder of this Note, be deemed to be a payment by the Company to
or for the account of the Senior Lender and no payments or distributions
applicable to Senior Debt which the holder of this Note receives by reason of
its being subrogated to the rights of the Senior Lender pursuant to the
provisions of this subsection 1.07 shall, as between the Company, its creditors
other than the Senior Lender and the holder of this Note, be deemed to be a
payment by the Company to or for the account of the holder of this Note; it
being understood that the provisions of this Section One are intended solely for
the purpose of defining the relative rights of the holder of this Note, on the
one hand, and the Senior Lender, on the other hand. In each case subject to the
rights of the Senior Lender under this Section One, nothing contained in this
Section One or elsewhere in this Note, is intended to or shall impair, as
between the Company and the holder of this Note, the obligation of the Company,
which is absolute and unconditional, to pay to the holder of this Note the
principal of, and interest, on this Note as and when the same shall become due
and payable in accordance with the terms of this Note, or is intended to or
shall affect the relative rights of the holder of this Note and creditors of the
Company other than the Senior Lender, nor shall anything in this Note prevent
the holder of this Note from exercising all remedies otherwise permitted by
applicable law upon default under this Note.
1.08 Right of Payee. The Company shall give prompt written notice to
--------------
the Payee of any Liquidation Event. The Payee shall be entitled to assume that
no such event has occurred unless the Company or any one or more Senior Debt
holders or any representative therefor has given such notice. Upon any payment
or distribution of assets of the Company referred to in subsection 1.04, the
Payee shall be entitled to rely upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, delivered to the Payee, for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Debt and other indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section One.
1.09 Obligations of Payee and Holder. By acceptance of this Note,
-------------------------------
the holder hereof agrees to be bound by the obligations of the Payee and holder
of this Note set forth herein.
1.10 Reliance of Senior Lender. The Payee, by its acceptance of this
-------------------------
Note, shall be deemed to acknowledge and agree that the foregoing subordination
provisions are, and are intended to be, an inducement to and a consideration of
each Senior Lender, whether the
- 5 -
<PAGE>
Senior Debt held by such Senior Lender was created or acquired before or after
the creation of the indebtedness evidenced by this Note and whether such Senior
Lender is now known or hereafter becomes known, and each Senior Lender shall be
deemed conclusively to have relied on such subordination provisions in acquiring
and holding, or in continuing to hold, such Senior Debt and shall be entitled to
enforce the provisions of Section One.
1.11 Reinstatement. The provisions of this Agreement shall continue to be
-------------
effective or be reinstated, as the case may be, if at any time any payment in
respect of Senior Debt is rescinded or must otherwise be returned by the Senior
Lender in the event of a Liquidation Event, all as though such payment had not
been made.
1.12 Subordination Not Impaired. All rights and interests of the Senior
--------------------------
Lender under this Section One with respect to Senior Debt and all agreements and
obligations of the Payee and each subsequent holder of this Note shall remain in
full force and effect irrespective of (i) any change in the time, manner or
place of payment of or any other term of Senior Debt or any amendment or waiver
of or any consent to departure from any of the terms thereof or (ii) any
exchange, release or non-perfection of any security interest or lien in any
collateral securing Senior Debt or any release or amendment or waiver of or
consent to departure from any guarantee for all or any Senior Debt.
SECTION TWO
Acceleration
------------
2.01 Events of Default. If any of the following events shall occur and be
-----------------
continuing:
(a) The Company shall fail to pay any principal of this Note when due in
accordance with the terms hereof (including without limitation any
mandatory prepayment), or the Company shall fail to pay any interest on
this Note within ten days after any such interest becomes due; provided,
however, that to the extent that the holder of this Note shall no longer be
entitled to receive or accept any payment hereunder pursuant to subsection
1.03, and, on or prior to the date of expiration of the one year period
referenced in such subsection 1.03, the Company (with the consent of the
Senior Lender) shall pay all delinquent amounts due to the holder of this
Note (without giving regard to any acceleration of this Note), then any
acceleration of this Note shall automatically be deemed rescinded and such
default shall automatically be deemed cured; or
(b) The Company shall default in the observance or performance of any
agreement contained in this Note (other than as provided elsewhere in this
subsection 2.01) and such default shall continue unremedied for a period of
45 days; or
(c) The Company shall be in default on the Senior Debt and the Senior Debt
shall have been declared due and payable prior to the date of its scheduled
maturity or the
- 6 -
<PAGE>
Company shall have failed to pay the Senior Debt at maturity and such
failure shall not have been remedied or waived for a period of 45 days; or
(d) (i) The Company shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Company shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the
Company any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Company any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) the Company shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii) or (iii) above;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (d) of this Section with respect to the
Company, automatically the principal amount hereof (with accrued interest
thereon) and all other amounts owing under this Note shall immediately become
due and payable, and (B) if such event is any other Event of Default, the Payee
may, by notice to the Company, declare the principal amount hereof (with accrued
interest thereon) and all other amounts owing under this Note to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived.
SECTION THREE
Definitions
-----------
3.01 "Applicable Rate" means (i) from the date hereof through and including
the second anniversary of the date hereof, a rate per annum equal to 12% and
(ii) after such date, a rate per annum equal to 13%.
3.02 "Business Day" means any day on which the New York Stock Exchange is
open for trading and on which commercial banks in the Commonwealth of
Massachusetts, the State of New York or the District of Columbia are not
authorized or required by law to close.
- 7 -
<PAGE>
3.03 "Event of Default" means any of the events specified in subsection
2.01, provided that any requirement for the giving of notice, the lapse of time,
--------
or both, or any other condition, has been satisfied.
3.04 "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
SECTION FOUR
Prepayment
----------
4.01 Mandatory Prepayment. Provided that no default exists with respect to
--------------------
the Senior Debt that has not been cured to the satisfaction of the Designated
Senior Lender or waived by the Designated Senior Lender in writing or if such
default is not a payment default, for which within one year after giving notice
to the Company of such default, the Designated Lender shall not have accelerated
the maturity of the Senior Debt, if the Company shall (i) obtain financing,
subordinated to all Senior Debt upon the same terms as this Note or terms
otherwise acceptable to the Senior Lender, or (ii) raise additional equity from
the sale of its capital stock or of rights, options or warrants entitling the
holder to subscribe for or purchase capital stock of the Company, excluding upon
the exercise of stock options granted to employees, officers, directors or
consultants of the Company and excluding the issuance of equity under a dividend
reinvestment plan or in connection with the acquisition of stock or assets or to
finance the acquisition of stock or assets, then the Company shall prepay this
Note in an amount equal to the net cash proceeds of such subordinated debt or
equity financing. In addition, if the Senior Debt is paid in full in cash, the
net cash proceeds of any debt financing of the Company (other than proceeds
applied to payment of the Senior Debt) shall be applied to prepay this Note.
Any such prepayment shall be made within 30 days after the receipt of such
proceeds.
4.02 Optional Prepayment. The Company shall have the right at any time or
-------------------
from time to time, subject to the provisions of Section One, to prepay this Note
in whole or in part, together with all accrued and unpaid interest with respect
to such prepaid amount.
SECTION FIVE
Miscellaneous
-------------
5.01 Governing Law. This Note shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Massachusetts.
5.02 Successors and Assigns. This Note shall be binding upon and inure to
----------------------
the benefit of the Company and its successors and the Payee and its successors
and assigns. The Company may not assign its obligations under this Note.
- 8 -
<PAGE>
5.03 Amendments. This Note may not be modified or discharged orally, but
----------
only by an agreement in writing executed by the party against whom enforcement
of any modification or discharge is sought.
5.04 Expenses of Collection. The Company agrees to pay all reasonable out-
----------------------
of-pocket expenses, including counsel fees, incurred by the Payee arising in
connection with the collection of amounts due and unpaid hereunder.
5.05 Headings. The headings of the Sections and subsections of this Note
--------
are inserted for convenience only and do not constitute a part of this Note.
IN WITNESS WHEREOF, the Company has caused this Note to be signed under
seal in its corporate name by one of its officers thereunto duly authorized and
this Note to be dated as of the day and year first written above.
BRUNSWICK BIOMEDICAL
CORPORATION
By /s/ James H. Miller
-----------------------
Name: James H. Miller
Title: President
-9-
<PAGE>
EXHIBIT 4(D)
STOCK PLEDGE AGREEMENT
----------------------
STOCK PLEDGE AGREEMENT (this "Agreement") dated as of April 15, 1996 by and
between BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation (the
"Stockholder"), and ROBERT HERZSTEIN, AS PERSONAL REPRESENTATIVE OF THE ESTATE
OF DR. STANLEY J. SARNOFF (the "Seller").
WITNESSETH:
WHEREAS, the Seller has agreed to accept a Subordinated Promissory Note
dated as of the date hereof executed by the Stockholder (the "Subordinated
Note") as part of the consideration for the sale of 1,888,126 shares (the
"Shares") of common stock of Survival Technology, Inc. of common stock of
Survival Technology, Inc. (the "Company"), a Delaware corporation, by the Seller
to the Stockholder; and
WHEREAS, the Seller is willing to accept the Subordinated Note upon the
condition, among others, that the Stockholder enter into this Agreement to
secure the Liabilities (as defined in Section 11 hereof);
NOW, THEREFORE, for and in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
covenant and agree as follows:
1. Pledge. To secure the prompt, punctual and faithful performance of all
-------
and each of the present and future Liabilities, subject to the provisions of
Section 4 below, the Stockholder hereby grants to the Seller, for the benefit of
the Seller, a security interest (i) in and to the Shares, and pledges, and
promises upon release of the Senior Stock Pledge (defined below) to deliver, to
the Seller any certificate representing the Shares (the "Pledged Securities"),
together with appropriate undated stock powers duly executed in blank, and (ii)
in and to all products, proceeds, substitutions, additions, interest, dividends
and other distributions in respect thereto, as described in Section 2 below (all
of which is referred to hereinafter as the "Collateral"). The Stockholder shall
from time to time execute such financing statements and renewals thereof and
assignments of account and endorse such instruments and paper as the Seller may
reasonably request for the purpose of perfecting or continuing the security
interests granted herein.
2. Stock Dividends, Distributions, etc. If, while this Agreement is in
------------------------------------
effect, the Stockholder shall become entitled to receive or shall receive any
stock certificate (including, without limitation, any certificate representing a
stock dividend or a stock distribution in connection with any reclassification,
increase or reduction of capital, or issued in connection with any
reorganization), option, warrant or rights, whether as an addition to, in
substitution of or in exchange for any Pledged Securities, the Stockholder
agrees to accept the same as agent for the Seller and to hold the same in trust
on behalf of and for the benefit of the Seller and to deliver the same forthwith
to the Seller in the exact form received, with the
<PAGE>
endorsement of the Stockholder when necessary and/or appropriate undated stock
powers duly executed in blank, to be held by the Seller as part of the
Collateral. At any time after an Event of Default (as defined in Section 11
hereof) has occurred and is continuing, any sums paid upon or in respect of the
Pledged Securities upon the liquidation or dissolution of the Company or any
other issuer thereof shall be paid over to the Seller as part of the Collateral;
and in case any distribution of capital shall be made on or in respect of the
Pledged Securities or any property shall be distributed upon or with respect to
the Pledged Securities pursuant to the recapitalization or reclassification of
the capital of the issuer thereof or pursuant to the reorganization thereof, the
property so distributed shall be delivered to the Seller as part of the
Collateral. All sums of money and property so paid or distributed in respect of
the Pledged Securities that are received by the Stockholder shall, until paid or
delivered to the Seller, be held by the Stockholder in trust as part of the
Collateral.
3. Cash Dividends; Voting Rights. Unless and until an Event of Default
------------------------------
has occurred and is continuing, the Stockholder shall be entitled to receive all
cash dividends and distributions paid in respect of the Pledged Securities, to
vote the Pledged Securities and to give consents, waivers and ratifications, and
to take other action in respect of the Pledged Securities. So long as an Event
of Default has occurred and is continuing, the Seller shall have the right, upon
notice to the Stockholder, to receive all cash dividends paid in respect of the
Pledged Securities and to exercise voting rights as specified in Section 7
hereof; provided, however, that prior to any distribution to the Seller, the
Stockholder shall be entitled to receive cash dividends and distributions paid
in respect of the Pledged Securities to the extent necessary to make payments of
amounts due on the Senior Debt (as defined in the Subordinated Note) and only to
the extent such amounts are so applied.
4. Subordination to Senior Stock Pledge.
-------------------------------------
(a) Notwithstanding any other provision contained herein, the security
interest and pledge in and to the Collateral granted to the Seller under this
Agreement (such security interest and pledge, the "Junior Lien") shall be
junior, subordinate and subject to any other security interest and pledge
securing Senior Debt (as defined in the Subordinated Note)(such security
interest and pledge, the "Senior Lien"), including, but not limited to, the
security interest and pledge created by the Stock Pledge Agreement dated as of
April 15, 1996 between the Stockholder and Internationale Nederlanden (U.S.)
Capital Corporation, to the extent and in the manner set forth in this Section
4. Capitalized terms used in this Section 4 that are not otherwise defined in
this Agreement shall have the meanings ascribed to such terms in the
Subordinated Note.
(b) The Seller hereby agrees that upon disposition of any of the
Collateral by the Senior Lender, pursuant to Remedial Action or otherwise, the
proceeds of such disposition, after the fees and expenses incurred by Senior
Lender in connection with such disposition, shall first be applied to the
satisfaction in full in cash of Senior Debt. To the extent any proceeds remain
after such application, such proceeds shall be turned over by the Senior Lender
to the Seller or as a court of competent jurisdiction shall otherwise direct.
- 2 -
<PAGE>
(c) The Seller hereby agrees that it shall not take any Remedial Action
with respect to any of the Collateral granted to the Seller under this Agreement
prior to (i) 180 days after the Seller shall have given the Designated Senior
Lender written notice that an Event of Default exists under the Subordinated
Note, that the Seller has accelerated the maturity of the Subordinated Note and
that the Seller intends to take such Remedial Action, provided, however, that
(i) if such six-month period expires during any period of time that the
-------
Stockholder is not permitted to make and the Seller is not permitted to receive
any payments in respect of the Subordinated Note pursuant to subsections 1.02 or
1.03 of the Subordinated Note (a "Blockage Period"), Seller shall not take
Remedial Action until the earlier of (x) 30 days after the expiration of such
-------
Blockage Period or (y) the number of days after the expiration of such Blockage
Period equal to the number of days remaining in such six-month period as of the
first day of such Blockage Period and (ii) if such six-month period begins
------
during a Blockage Period, Seller shall not take Remedial Action until the later
-----
of (x) the expiration of such six-month period and (y) 30 days after the
expiration of such Blockage Period.
(d) The Stockholder agrees that in the event the Senior Lender seeks to
take any Remedial Action with respect to the Collateral, the Stockholder shall
not seek to hinder, delay, impede or seek judicial review of or jurisdiction
over the method, manner or actions of the Senior Lender in its pursuit of any
Remedial Action.
(e) As used in this Section 4, "Remedial Action" means any action or
agreement to foreclose upon, take possession of, sell, lease or otherwise
dispose of, or in any manner realize or seek to realize upon any of the
Collateral, whether pursuant to the Uniform Commercial Code of any state or any
other applicable law, pursuant to contractual rights or otherwise, by
foreclosure, by self-help repossession, conveyance in lieu of foreclosure, or
exercise of any voting rights or proxy with respect to any capital stock.
(f) If there shall occur a Liquidation Event (as defined in the
Subordinated Note) with respect to the Stockholder, (i) the Senior Lender shall
be entitled to receive any payment or distribution in respect of the Collateral
until payment in full in cash of all Senior Debt before the Stockholder shall be
entitled to receive any payment or distribution in respect of the Collateral,
and (ii) any payment or distribution which would otherwise (but for this Section
4) be payable or deliverable to the Stockholder in respect of the Collateral
shall be paid or delivered directly to the Senior Lender (ratably according to
the aggregate amounts remaining unpaid on account of the Senior Debt held by
each such Senior Lender) or to a trustee or other representative of the Senior
Lender.
(g) In the event that, notwithstanding the terms of this Section 4, the
Seller receives any payment or distribution in respect of the Collateral which
is rightfully payable to the Senior Lender, then, in any such event, such amount
shall, promptly after receipt thereof by the Seller, be paid over in the form
received to the Senior Lender for application to Senior Debt.
(h) The provisions of this Section 4 shall be effective at all times
during the term of this Agreement and notwithstanding (i) any bankruptcy,
moratorium, reorganization or other insolvency proceeding with respect to the
Stockholder, (ii) the priorities which would
- 3 -
<PAGE>
otherwise result from the order of creation, effectiveness, attachment or
perfection of the Senior Lien or the Junior Lien, (iii) the taking of possession
of the Collateral by the Senior Lender, the Seller or any other person or
entity, (iv) the filing of any financing statement or the recording of any other
instrument in any filing or recording office, (v) the order in which any of the
indebtedness or obligations secured by the Senior Lien or the Liabilities are
created, (vi) whether the Senior Lien or the Junior Lien is now perfected,
hereafter ceases to be perfected, is avoidable by any bankruptcy trustee,
otherwise is set aside or invalidated, or lapses, or (vii) any other matter
whatsoever. The provisions of this Section 4 shall continue to be effective or
be reinstated, as the case may be, if at any time any payment in respect of
Senior Debt is rescinded or must otherwise be returned by the Senior Lender in
the event of a Liquidation Event, as though such payment had not been made.
(i) The Seller, by its acceptance of the Subordinated Note and the Junior
Lien granted pursuant to this Agreement, shall be deemed to acknowledge and
agree that the foregoing subordination provisions in this Section 4 are, and are
intended to be, an inducement to and a consideration of each Senior Lender,
whether the Senior Debt by such Senior Lender was created by or acquired before
or after the Liabilities or the Junior Lien and whether such Senior Lender is
now known or hereafter becomes known, and each Senior Lender shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
holding or in continuing to hold, such Senior Debt and shall be entitled to
enforce the provisions of this Section 4.
5. Stockholder's Representations. The Stockholder hereby represents and
------------------------------
warrants as follows:
(a) The Stockholder has full capacity and legal right to enter into
this Agreement, to be bound hereby and to perform and observe the terms and
conditions hereof.
(b) This Agreement has been duly executed and delivered by the
Stockholder and constitutes the legal, valid and binding obligation of the
Stockholder enforceable against it in accordance with its terms, subject, as to
the enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency and similar laws affecting creditors' rights generally, to moratorium
laws from time to time in effect and to general principles of equity.
(c) The execution, delivery and performance by the Stockholder of
this Agreement does not and will not (i) violate or constitute a default under
any material provision of any agreement, indenture, note or instrument that is
binding upon the Stockholder or by which its properties are bound or materially
affected, or any order, writ, injunction or decree of any court or governmental
instrumentality binding on such Stockholder, or (ii) require any filing with or
consent or other act by or in respect of any governmental authority or other
person or entity (other than the filing of the appropriate number of UCC-1
financing statements covering the Pledged Securities, if necessary, and any
consent obtained by the Stockholder prior to the date hereof) or (iii)
constitute a default thereunder or result in the imposition or require the
creation of any lien or charge (other than those created, continued or otherwise
contemplated hereby) upon the Pledged Securities of the Stockholder.
- 4 -
<PAGE>
(d) The Pledged Securities are held and owned by the Stockholder free
and clear of all liens, encumbrances, attachments, security interests, pledges
and charges, other than those in favor of the Seller and those created by the
Senior Stock Pledge.
6. Stockholder's Covenants. The Stockholder shall:
------------------------
(a) if the Pledged Securities are in the form of a certificated
security, within the meaning of the applicable Uniform Commercial Code,
(the "Code"), upon release of the Senior Stock Pledge, surrender, or cause
to be surrendered, possession of the Pledged Securities to the Seller;
(b) if the Pledged Securities are in the form of an uncertificated
security, within the meaning of the Code, cause the Company to record this
pledge, subject and junior to the Senior Stock Pledge, in the records of
the Company relating to the Pledged Securities;
(c) execute all such instruments, documents and papers as the Seller
may reasonably request now and from time to time hereafter with respect to
the perfection of the security interest granted herein and the assignment
effected hereby;
(d) keep the Pledged Securities free and clear of all liens,
encumbrances, attachments, security interests, pledges and charges, except
in favor of the Seller or any Senior Lender (as that term is defined in the
Subordinated Note) or as permitted by this Agreement;
(e) after the release of the Senior Stock Pledge, deliver to the
Seller, if and when received by the Stockholder, any item representing or
constituting any of the Collateral or proceeds of the Collateral;
(f) not cause or permit any of the Collateral presently evidenced by
a written certificate to be converted to uncertificated securities, except
with the prior written consent of the Seller.
Notwithstanding anything to the contrary contained in this Agreement, the
Stockholder shall be entitled to sell or transfer or dispose of any Pledged
Securities to any other person or entity provided that such sale, transfer or
disposition is subject to the security interest granted herein and the
transferee executes and delivers to the Seller a Stock Pledge Agreement in the
form of this Agreement covering such Pledged Securities.
7. Effect of Default. Upon the acceleration of the Liabilities after an
------------------
Event of Default and subject to the rights of the pledgee under the Senior Stock
Pledge and any Senior Lender:
(a) the Seller shall have the right to apply the Collateral toward
the satisfaction of the Liabilities, to sell or otherwise dispose of the
Collateral and/or enforce and collect the Collateral for application towards
(but not necessarily in complete satisfaction of) the Liabilities, in addition
to all of the rights and remedies of a secured party upon default
- 5 -
<PAGE>
under the Code. The Stockholder shall remain liable to the Seller for any
deficiency remaining following such application to any Liabilities.
(b) Any and all shares of the Pledged Securities may be registered in
the name of the Seller or its nominee, and the Seller or its nominee may
thereafter without further notice exercise all voting and corporate rights at
any meeting of any issuer and exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any shares of the Pledged Securities as if it were the absolute owner thereof,
including without limitation, the right to exchange at its discretion any and
all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any issuer or upon the exercise by any
issuer or the Seller or such nominee of any right, privilege or option
pertaining to any shares of the Pledged Securities, and, in connection
therewith, to deposit and deliver any and all of the Pledged Securities with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as it may determine, all without liability except to
account for property actually received by it, but the Seller shall have no duty
to exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing. The Stockholder
acknowledges that any exercise by the Seller of the Seller's rights upon an
Event of Default may be subject to compliance by the Seller with state and/or
federal law governing the sale of securities. The proceeds of any collection or
of any sale or disposition of the Collateral held pursuant to this Agreement
shall be applied towards the Liabilities in such order and manner as the Seller
determines in its sole discretion, notwithstanding any statute, custom, or usage
to the contrary.
8. Private Placements.
-------------------
(a) The Stockholder recognizes that the Seller may be unable to
effect a public sale of any or all of the Pledged Securities by reason of
certain prohibitions contained in the federal securities laws and applicable
state or foreign securities laws, but may resort to one or more private sales
thereof to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire such securities for their own account for investment
and not with a view to the distribution or resale thereof. The Stockholder
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private sale shall
be deemed to have been made in a commercially reasonable manner. The Seller
shall be under no obligation to delay a sale of any of the Pledged Securities
for the period of time necessary to permit the issuer of such securities to
register such securities for public sale under the federal securities laws, or
under applicable state securities laws, even if the issuer would agree to do so.
(b) The Stockholder further agrees to use its best efforts to do or
cause to be done all such other acts and things (other than effect the
registration of the Pledged Securities under applicable federal, state or
foreign securities laws) as may be necessary to make such sale or sales of any
portion or all of the Pledged Securities valid and binding and in compliance
with any and all applicable laws, regulations, orders, writs, injunctions,
decrees or awards of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over any such sale
or sales, all at the Stockholder's
- 6 -
<PAGE>
expense. The Stockholder further agrees that a breach of any of the covenants
contained in this Section 8 will cause irreparable injury to the Seller, and
that the Seller will have no adequate remedy at law in respect of such breach
and, as a consequence, agree that each and every covenant contained in this
Section 8 shall be specifically enforceable against the Stockholder.
9. Stockholder to Cooperate.
-------------------------
In connection with the sale or transfer of the Collateral in
connection with the exercise of remedies pursuant to Section 7 hereof, but only
after release of the Senior Stock Pledge:
(a) The Stockholder hereby agrees in connection with the sale of any
of the Pledged Securities, to endorse in favor of the Seller or its designee any
of the Pledged Securities, to cause the transfer of any of the Pledged
Securities in such name as the Seller may from time to time determine.
(b) In connection with any action to enforce any of the Collateral,
the Seller may make such compromise or settlement with respect to the Collateral
as the Seller determines to be appropriate.
10. Cumulative Remedies. The rights, remedies, powers, privileges, and
--------------------
discretions of the Seller hereunder (the "Seller's Rights and Remedies"), shall
be cumulative and not exclusive of any rights or remedies that it otherwise may
have. No delay or omission by the Seller in exercising or enforcing any of the
Seller's Rights and Remedies shall operate as, or constitute, a waiver thereof.
No waiver by the Seller of any Default or of any default under any other
agreement shall operate as a waiver of any other default hereunder or under any
other agreement. No exercise of any of the Seller's Rights and Remedies and no
other agreement or transaction of whatever nature entered into between the
Seller and the Stockholder at any time shall preclude any other exercise of the
Seller's Rights and Remedies. No waiver by the Seller of any of the Seller's
Rights and Remedies on any one occasion shall be deemed a waiver on any
subsequent occasion, nor shall it be deemed a continuing waiver. All of the
Seller's Rights and Remedies and all of the Seller's rights, remedies, powers,
privileges and discretions under any other agreement or transaction are
cumulative and not alternative or exclusive and may be exercised by the Seller
at such time or times and in such order of preference as the Seller in its sole
discretion may determine.
11. Certain Definitions.
--------------------
(a) "Event of Default" shall mean an Event of Default as defined in
Section 3.03 of the Subordinated Note.
(b) "Liabilities" shall mean (i) all liabilities of the Stockholder
under the Subordinated Note, and (ii) any additional obligations which the
Stockholder may have under this Agreement.
- 7 -
<PAGE>
12. Waiver by Stockholder. The Stockholder, except as otherwise set forth
----------------------
in the Subordinated Note waives presentment, demand, notice and protest with
respect to the Liabilities and the Collateral.
13. Duties of the Seller. The Seller shall have no duty as to the
---------------------
collection or protection of the Collateral or any income or distribution
thereon, beyond the safe custody of such of the Collateral as may come into the
possession of the Seller and shall have no duty as to the preservation of rights
against prior parties or any other rights pertaining thereto. The Seller's
Rights and Remedies may be exercised without resort or regard to any other
source of satisfaction of the Liabilities.
14. Termination. This Agreement and the security interest in the
-----------
Collateral created hereby shall terminate when either (i) all of the monetary
obligations then outstanding or pending constituting Liabilities have been paid
in full or (ii) upon the merger of the Company with or into Survival Technology,
Inc. ("STI") or a subsidiary of STI; provided that STI shall have assumed
(either by operation of law or by written agreement) and shall be liable for the
Liabilities and the Senior Lien on the Pledged Securities shall have terminated,
and in either such event the Seller shall promptly return to the Stockholder any
of the Collateral in its possession and file all appropriate UCC-3 and other
termination statements as may be required to publicly evidence such termination.
15. Binding Agreement. This Agreement shall be binding upon the
------------------
Stockholder and upon the Stockholder's successors and assigns and shall inure to
the benefit of the Seller and its respective successors and assigns.
16. Counterparts. This Agreement may be executed in any number of
-------------
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute one and the same instrument.
17. Complete Agreement. The within Agreement and all other instruments
-------------------
executed in connection herewith incorporate all discussions and negotiations
between the Seller and the Stockholder concerning the matters included herein
and in such other instruments. No such discussions or negotiations shall limit,
modify or otherwise affect the provisions hereof. No modification, amendment or
waiver of any provision of the within Agreement or of any provision of any other
agreement between the Stockholder and the Seller shall be effective unless
executed in writing by the party to be charged with such modification, amendment
and waiver, and by a duly authorized officer thereof.
18. Use of Originals. This Agreement and all other documents in the
-----------------
Seller's possession that relate to the Liabilities may be reproduced by the
Seller by any photographic, photostatic, microfilm, micro-card, miniature
photographic, xerographic or similar process, and, with the exception of
instruments constituting the Collateral, the Seller may destroy the original
from which any document was so reproduced. 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
- 8 -
<PAGE>
in the regular course of business) and any enlargement, facsimile or further
reproduction shall likewise be admissible in evidence.
19. Governing Law. This Agreement, and all rights and obligations
--------------
hereunder, including matters of construction, validity and performance, shall be
governed by the laws of the State of New York, except to the extent that the
corporation law of the State of Delaware or the Code of another state shall be
applicable.
20. Sealed Instrument. It is intended that this Agreement take effect as
------------------
a sealed instrument.
IN WITNESS WHEREOF, the undersigned have executed under seal the foregoing
Stock Pledge Agreement as of the date first above written.
BRUNSWICK BIOMEDICAL CORPORATION
By /s/ James H. Miller
-------------------------------------------
Title: President
/s/ Robert Herzstein
-----------------------
Robert Herzstein, as
Personal
Representative of the
Estate of Dr. Stanley
J. Sarnoff and not
Individually
- 9 -
<PAGE>
EXHIBIT 5(A)
This NOTE PURCHASE AGREEMENT (this "Agreement") is made as of March 15,
1996 by and between BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts
corporation (the "Company"), and EM INDUSTRIES, INC., a New York corporation
("EMI").
W I T N E S S E T H:
-------------------
WHEREAS, the Company desires to purchase from the Estate of Stanley J.
Sarnoff (the"Estate"), and the Estate desires to sell to the Company, the
Estate's shares of capital stock (the "Shares") of Survival Technology, Inc., a
Delaware corporation, pursuant to the terms and conditions of a Stock Purchase
Agreement to be dated as of March 18, 1996 by and between the Company and the
Estate (the "Stock Purchase Agreement"); and
WHEREAS, the Company desires to obtain, and EMI desires to provide,
financing for the Company's purchase of the Shares in exchange for the
consideration and on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants contained herein and intending to be legally bound hereby, the
Company and EMI hereby agree as follows:
ARTICLE 1.
FINANCING AND CONSIDERATION THEREFOR
1.1 Provision of Financing. EMI hereby agrees to lend to the Company, on
----------------------
the date of and subject to consummation of the Closing of the Stock Purchase
Agreement (as such term is defined in the Stock Purchase Agreement)("Closing"),
$1,000,000 in immediately available funds by wire transfer to an account to be
designated by the Company. Wire transfer instructions are attached hereto as
Exhibit A.
- ---------
1.2 Consideration for Financing. As consideration for the financing to
---------------------------
be provided by EMI as set forth in Section 1.1 above, the Company will execute
and deliver to EMI $1,000,000 aggregate principal amount of the Company's
Subordinated Notes due 2001 (the "Notes"), such term to include any note or
notes issued in substitution therefor. The Notes shall be substantially in the
form set out in Exhibit B, with such changes therefrom if any, as may be
---------
approved by the Company and EMI. At the Closing, the Company will deliver the
Notes to EMI in the form of a single note dated the date of the Closing and
payable to EMI, against delivery by EMI of the purchase price therefor as
described in Section 1.1.
<PAGE>
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF EMI
EMI hereby represents and warrants to the Company as follows:
2.1 Organization and Authority. EMI is a corporation duly organized,
--------------------------
validly existing and in good standing under the laws of New York, with all
requisite corporate power and authority to execute, deliver and perform this
Agreement.
2.2 Authorization. All corporate or other actions on the part of EMI
-------------
necessary to authorize the execution, delivery and performance of this Agreement
have been duly taken. This Agreement has been duly executed and delivered by
EMI and, assuming the due authorization, execution and delivery thereof by the
Company, constitutes a valid and binding obligation of, and is enforceable
against, EMI in accordance with its terms, except to the extent that enforcement
may be limited by applicable bankruptcy, insolvency and other laws of general
applicability affecting creditors' rights and by general equity principles.
2.3 Approvals and Consents. Neither the execution, delivery or
----------------------
performance by EMI of, nor the consummation of the transactions contemplated by,
this Agreement does nor will (with the giving of notice or passage of time or
both) conflict with or result in a breach or violation of, or constitute a
default under, or result in (or create in any party the right to cause) the
acceleration of any performance or the modification, termination, suspension or
impairment of, or result in the loss, revocation, impairment, suspension or
forfeiture of any rights of EMI under (a) any contract or agreement to which EMI
is a party or by which EMI is or may be bound or to which any of its assets is
or may be subject; (b) the Certificate of Incorporation or bylaws of EMI, as
amended to date; (c) any judgment to or by which EMI or any of its assets is or
may be bound; or (d) any law, ordinance or regulation applicable to EMI. No
third party consent or governmental approval is required for the execution,
delivery and performance by EMI of, and the consummation of the transactions
contemplated by, this Agreement.
2.4 Legal and Governmental Proceedings and Judgment. There is no (a)
-----------------------------------------------
legal action, claim, proceeding, investigation or controversy pending or, to the
best of EMI's knowledge, threatened against or otherwise involving EMI or any of
its directors, officers, business or assets or (b) judgment, order, award or
consent decree outstanding against or affecting EMI, which in either case does
or might adversely affect the ability of EMI to consummate the transactions
contemplated hereby.
2.5 Acquisition of Notes for Investment. EMI is an "Accredited Investor"
-----------------------------------
within the meaning of Rule 501(a) under the Securities Act of 1933, as amended
("Securities Act"), and is purchasing the Notes to be delivered hereunder for
its own account for investment and with no present intention of distributing or
reselling such securities. There is no undertaking by the Company to register
such securities under the Securities Act, and they cannot be sold unless they
are subsequently registered under the Securities Act or an exemption from
registration is available. EMI will not transfer any such securities or any
interest therein unless, prior to any such transfer, EMI shall have furnished to
the Company
- 2 -
<PAGE>
an opinion of counsel satisfactory to the Company to the effect that such
transfer is exempted under the Securities Act. Any such assignment, pledge,
hypothecation, or other transfer, or attempted assignment, pledge,
hypothecation, or other transfer, made without compliance with such requirement
shall as against the Company be null and void and of no legal effect. Until
such time as such securities may be freely transferable without registration
under the Securities Act they will bear legends stating that they have not been
registered under the Securities Act and are subject to the above restrictions on
transfer. EMI has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of acquiring the
Notes pursuant to this Agreement, and has the financial ability to bear the
economic risks of subscribing for and holding such securities for investment.
2.6 Source of Funds. No source of funds used by EMI to pay the purchase
---------------
price of the Notes includes assets of any "employee benefit plan", as such term
is used in Section 3 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
2.7 Finders and Brokers. EMI has not entered into any contract,
-------------------
arrangement or understanding with any person which will result in the obligation
of the Company to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to EMI as follows:
3.1 Organization and Authority. The Company is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, with all requisite corporate power and authority
to carry on its business as currently conducted and to own, lease, use and
operate its properties at the places currently located and in the manner
currently used or operated.
3.2 Authorization. The Company has all requisite corporate and other
-------------
power and authority to execute, deliver and perform this Agreement and the
Notes. All corporate or other actions on the part of the Company necessary to
authorize the execution, delivery and performance of this Agreement and the
Notes have been duly taken. This Agreement has been duly executed and delivered
by the Company and, assuming the due authorization, execution and delivery
thereof by EMI, and upon execution and delivery thereof by the Company, each
Note will constitute a valid and binding obligation of, and is, or will be,
enforceable against the Company in accordance with its terms.
3.3 Approvals and Consents. Neither the execution, delivery or
----------------------
performance by the Company of, nor the consummation of the transactions
contemplated by, this Agreement does or will (with the giving of notice or
passage of time or both) conflict with or result in a breach or violation of, or
constitute a default under, or result in (or create in any party the right to
cause) the acceleration of any performance or the modification, termination,
suspension or impairment of, or result in the loss, revocation, impairment,
suspension or
- 3 -
<PAGE>
forfeiture of any rights of the Company under (a) any contract or agreement to
which the Company is a party or by which the Company is or may be bound or to
which any of its assets is or may be subject; (b) the Articles of Organization
or Bylaws of the Company, as amended to date; (c) any judgment to or by which
the Company or any of its assets is or may be bound; or (d) any law, ordinance
or regulation applicable to the Company. No third party consent or governmental
approval is required for the execution, delivery and performance by the Company
of, and the consummation of the transactions contemplated by, this Agreement.
3.4 Legal and Governmental Proceedings and Judgments. There is no (a)
------------------------------------------------
legal action, claim, proceeding, investigation or controversy pending or, to the
best of the Company's knowledge, threatened against or otherwise involving the
Company or any of its directors, officers, business or assets or (b) judgment,
order, award or consent decree outstanding against or affecting the Company,
which in either case does or might adversely affect the ability of the Company
to consummate the transactions contemplated hereby.
3.5 Financial Statements. The Company has delivered to EMI a true and
--------------------
correct copy of its annual audited consolidated financial statements for the
year ended June 30, 1995. Such financial statements present fairly the
consolidated financial position and results of operations of the Company and its
subsidiaries at such date and for the year then ended in accordance with
generally accepted accounting principles consistently applied. The Company has
not suffered any material adverse change in its financial condition or results
of operations since June 30, 1995 except as disclosed in or contemplated by such
consolidated financial statements or in the disclosure schedule attached hereto.
3.6 Finders and Brokers. The Company has not entered into any contract,
-------------------
arrangement or understanding with any person which will result in the obligation
of EMI to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
3.7 INDEMNIFICATION. THE COMPANY HEREBY AGREES TO INDEMNIFY AND HOLD EMI
---------------
AND ITS SUBSIDIARIES, AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS (EMI
AND SUCH OTHER PARTIES BEING COLLECTIVELY REFERRED TO HEREIN AS THE "EMI
INDEMNITEES") HARMLESS FROM, AND TO REIMBURSE EACH SUCH EMI INDEMNITEE FOR, ANY
LOSS, DAMAGE, DEFICIENCY, CLAIM, LIABILITY, OBLIGATION, SUIT, ACTION, FEE, COST
OR EXPENSE OF ANY NATURE WHATSOEVER, ARISING OUT OF, BASED UPON OR RESULTING
FROM (I) ANY INACCURACY IN OR ANY BREACH OF ANY REPRESENTATION AND WARRANTY OF
THE COMPANY CONTAINED IN THIS AGREEMENT OR ANY SCHEDULE, CERTIFICATE OR OTHER
WRITTEN INSTRUMENT OR DOCUMENT DELIVERED BY THE COMPANY PURSUANT HERETO, OR (II)
ANY BREACH OR NONFULFILLMENT OF, OR ANY FAILURE TO PERFORM, ANY OF THE
COVENANTS, AGREEMENTS OR UNDERTAKINGS OF THE COMPANY CONTAINED IN OR MADE
PURSUANT TO THIS AGREEMENT (ANY INDEMNIFICATION CLAIMS BY THE EMI INDEMNITEES
BASED UPON THE MATTERS DESCRIBED IN THIS SECTION 3.7 SEPARATELY REFERRED TO
HEREIN AS "EMI INDEMNITY CLAIMS"); PROVIDED, THAT NOTHING CONTAINED HEREIN SHALL
AFFECT THE SUBORDINATION OF THE NOTE TO THE SENIOR DEBT AND THE INDEMNITY
HEREUNDER SHALL BE SUBJECT TO SUCH SUBORDINATION. THE PARTIES ACKNOWLEDGE AND
AGREE THAT THE INDEMNIFICATION OBLIGATIONS OF THE COMPANY UNDER THIS SECTION 3.7
SHALL INCLUDE, WITHOUT
- 4 -
<PAGE>
LIMITATION, ANY LIABILITIES OR OBLIGATIONS ARISING OUT OF ANY AND ALL ACTIONS,
CLAIMS, SUITS, PROCEEDINGS, DEMANDS, ASSESSMENTS, JUDGMENTS, RECOVERIES,
DAMAGES, COSTS AND EXPENSES OR DEFICIENCIES INCIDENT TO THE DISPOSAL OF ANY SUCH
EMI INDEMNITY CLAIM ASSERTED UNDER THIS SECTION 3.7 AND ALL INTEREST, PENALTIES,
COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL OUT-OF-POCKET EXPENSES,
REASONABLE INVESTIGATION EXPENSES AND REASONABLE FEES AND DISBURSEMENTS OF
ACCOUNTANTS AND COUNSEL) ARISING OUT OF OR RELATED TO ANY SUCH EMI INDEMNITY
CLAIMS.
ARTICLE 4.
MISCELLANEOUS PROVISIONS
4.1 Applicable Law. This Agreement and all actions contemplated hereby
--------------
shall be construed in accordance with the laws of the State of New York,
applicable to contracts made and to be performed within such jurisdiction and
without taking into account any conflicts of laws rules or principles.
4.2 Counterparts. This Agreement may be executed simultaneously in any
------------
number of counterparts. Each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
Agreement.
4.3 Notices. All notices or other communications which are required or
-------
permitted to be given to either party hereunder shall be in writing and deemed
to have been duly given if delivered personally or sent by facsimile
transmission or by express mail or registered or certified mail (postage
prepaid, with return receipt requested) to the following address (or such other
address as such party may designate from time to time in writing):
If to the Company:
Brunswick Biomedical Technologies, Inc.
6 Thacher Lane
Wareham, MA 02571
Attn: President and Chief Executive
Officer
Telephone: 508-291-1830
Facsimile: 508-295-6615
If to EMI:
EM Industries, Inc.
Seven Skyline Drive
Hawthorne, New York 10532
Attn: President
Telephone: 914-592-4660
Telecopy: 914-592-8775
- 5 -
<PAGE>
4.4 Binding Effect; Assignment. This Agreement shall inure to the benefit
--------------------------
of and be binding upon each of the parties hereto and their respective
successors and assigns, but may not be assigned by either party without the
prior written consent of the other.
4.5 Entire Agreement. The terms and conditions herein contained
----------------
constitute the entire agreement between the parties relating to the subject
matter of this Agreement and shall supersede all previous communications between
the parties with respect to the subject matter of this Agreement. Neither party
has entered into this Agreement in reliance upon a representation, warranty or
undertaking of the other party which is not set out or referred to in this
Agreement.
4.6 Amendment. This Agreement may be varied, amended, or extended only by
---------
the written agreement of the parties through their duly authorized officers or
representatives.
4.7 Severability. If any provision of this Agreement is held illegal or
------------
unenforceable in a judicial proceeding, such provision shall be severed from
this Agreement and shall be inoperative; and the remainder of this Agreement
shall remain binding on the parties hereto.
4.8 Headings. The descriptive headings contained in this Agreement are
--------
inserted for convenience only and do not constitute a part of this Agreement.
4.9 No Waiver of Rights. No failure or delay on the part of either party
-------------------
in the exercise of any power or right hereunder shall operate as a waiver
thereof. No single or partial exercise of any right or power hereunder shall
operate as a waiver of such right or power or of any other right or power. The
waiver by either party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any other or subsequent breach hereunder.
All rights and remedies existing under this Agreement are cumulative with, and
not exclusive of, any rights or remedies otherwise available.
4.10 No Third Party Rights. This Agreement shall not be deemed or
---------------------
construed in any way to result in the creation of any rights or obligations in
any person not a party to this Agreement.
4.11 Expenses. Each party hereto shall pay its own costs and expenses,
--------
including, but not limited to, those of its attorneys and accountants, in
connection with this Agreement and the transactions contemplated hereby.
- 6 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
written above.
BRUNSWICK BIOMEDICAL CORPORATION
By: /s/ James H. Miller
-----------------------
James H. Miller
President
EM INDUSTRIES, INC.
By: /s/ Richard K. Hackett
--------------------------
Richard K. Hackett
President
- 7 -
<PAGE>
EXHIBIT A
WIRE TRANSFER INSTRUCTIONS
--------------------------
[Omitted from this Schedule 13D]
- 8 -
<PAGE>
EXHIBIT B
FORM OF NOTE
------------
[See Exhibit 5(b) to this Schedule 13D]
- 9 -
<PAGE>
EXHIBIT 5(B)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH
THE PROVISIONS OF THE ACT OR PURSUANT TO AN EXEMPTION THEREFROM.
BRUNSWICK BIOMEDICAL CORPORATION
Subordinated Promissory Note
Wareham, Massachusetts
April 15, 1996
ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED, PURSUANT TO AND TO THE
EXTENT PROVIDED IN SECTION ONE HEREOF, TO ALL SENIOR DEBT, AS DEFINED THEREIN.
Brunswick Biomedical Corporation (the "Company"), a Massachusetts
corporation, for value received, hereby promises to pay to EM INDUSTRIES, INC.
(together with its successors and assigns, the "Payee"), in lawful money of the
United States of America, the principal amount of ONE MILLION DOLLARS
($1,000,000.00), together with such additional amount as may be added to
principal on account of deferred interest pursuant to the next paragraph. The
principal amount of this Note shall be payable in seven equal consecutive
quarterly installments, each in the amount of $125,000, payable in cash on the
last day of each calendar quarter, beginning on April 30, 1999, and one final
payment of all unpaid principal (including such additional amount added to
principal on account of deferred interest) payable on or before the earlier of
(i) the fifth anniversary of any merger or consolidation (a "Merger") of the
Company with or into any other entity as a result of which the shareholders of
the Company receive capital stock or securities convertible into capital stock
registered under the Securities Exchange Act of 1934, or (ii) December 31, 2001
(such earlier date, the "Maturity Date").
The Company further agrees to pay interest in like money on the principal
amount hereof from time to time outstanding at a rate per annum equal to the
Applicable Rate (as defined herein) in effect from time to time. Interest shall
be computed on the basis of a 365-day year and the actual number of days
elapsed. Interest accruing on this Note from the date hereof through April 30,
1998 shall be added to the principal amount of this Note on the last day of each
calendar month, and shall bear interest thereafter at the Applicable Rate until
paid. Interest accruing on this Note after April 30, 1998 shall be payable in
cash monthly in
<PAGE>
arrears on the last day of each calendar month. Interest on this Note shall
also be payable upon payment in full of the unpaid principal amount hereof, at
scheduled maturity, pursuant to a mandatory prepayment or otherwise.
If any payment becomes due hereunder on a day which is not a Business Day
(as defined herein), the maturity thereof shall be extended to the next
succeeding Business Day and interest on any payment of principal so extended
shall be payable at the then Applicable Rate during such extension. This Note
is unsecured.
SECTION ONE
Subordination of Note
---------------------
1.01 Subordination. Anything in this Note to the contrary
-------------
notwithstanding, the indebtedness evidenced by this Note shall be subordinate
and junior in right of payment, to the extent and in the manner hereinafter set
forth, to the prior payment in full in cash of any and all Senior Debt (as
herein defined) now existing or hereafter arising. "Senior Debt" shall mean the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition in bankruptcy, whether or not such
interest constitutes an allowed claim), fees, indemnities, amounts reimbursable,
expenses, costs of enforcement and other amounts (including, without limitation,
obligations of the Company in respect of interest rate hedging obligations)
payable with respect to, any indebtedness under (a) the following credit
facilities to be provided by Internationale Nederlanden (U.S.) Capital
Corporation (the "Initial Senior Lender") to the Company: (i) a bridge loan
facility in the maximum principal amount of $11,000,000; (ii) a term loan in the
maximum principal amount of $11,000,000 to refinance in full the bridge loan
upon consummation of the Merger; and (iii) a $5,000,000 revolving credit
facility to refinance in full all indebtedness of STI outstanding as of the
Merger; (b) a Subordinated Promissory Note dated April __, 1996, payable to the
Estate of Dr. Stanley J. Sarnoff (the "Estate") and its successors and assigns
in the original principal amount of $4,700,000, (c) additional indebtedness for
borrowed money not to exceed $3,000,000 in outstanding principal amount that
recites that it is senior to this Note; and (d) any and all extensions,
refinancings, renewals, replacements, refundings, modifications, amendments and
restatements of Senior Debt described in clauses (a), (b), (c) or (d) of this
definition or any indebtedness that is incurred pursuant to a credit commitment
under a credit facility that refinances, replaces or refunds, in whole or in
part, indebtedness or unfunded commitments under credit facilities described in
clauses (a), (b) or (c) of this definition. The holder or holders from time to
time of any Senior Debt are hereinafter referred to individually or
collectively, as the context permits, as the "Senior Lender".
1.02 Prohibited Actions. Until the Senior Debt shall have been
------------------
indefeasibly paid in full in cash, the holder of this Note shall not without the
prior written consent of the Senior Lender (a) after the occurrence of a default
in any of the Senior Debt take action to execute, seize or otherwise collect
upon any assets of the Company pursuant to any judgment or decree of a court of
law or equity or any non-judicial remedy until the earlier of (i) the date upon
which the default in such Senior Debt has been cured to the satisfaction of the
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<PAGE>
Designated Senior Lender or waived by the Designated Senior Lender in writing or
(ii) one year after the Senior Lender shall have given notice to the Company of
such default, if the Designated Senior Lender shall not have accelerated the
maturity of the Senior Debt and such default is not a payment default; or (b)
accept from or on behalf of the Company money or property of any sort in whole
or partial satisfaction of any indebtedness evidenced by this Note, or accept
any prepayment of this Note, other than stock or other equity interests in the
Company, or indebtedness of the Company that has been subordinated to all Senior
Debt upon the same terms as this Note or terms otherwise acceptable to the
Senior Lender, except that the holder of this Note may accept interest payments
and scheduled principal payments (the "Periodic Payments") described above and
the mandatory prepayment described in Section 4 and principal and interest due
with respect to this Note on the Maturity Date, in each case, to the extent the
Company is not prohibited from making such payments under subsections 1.03 or
1.04 below.
1.03 Default of Senior Debt. Upon receipt by the Company of written
----------------------
notice given by the Designated Senior Lender of a default in any of the Senior
Debt, the holder of this Note no longer shall be entitled to receive or accept
any payments hereunder, whether Periodic Payments or otherwise, and the holder
shall hold the same in trust as trustee for the benefit of the Senior Lender and
turn over to the Designated Senior Lender) any such payments (other than shares
of stock of the Company, or indebtedness of the Company that has been
subordinated to all Senior Debt upon the same terms as this Note or terms
otherwise acceptable to the Designated Senior Lender, distributed to it to
settle any claim described in subsection 1.04 below) it may obtain after the
occurrence of such default in the form received and after receiving the
Designated Senior Lender's aforesaid notice of default. Such prohibition shall
continue until the earliest date upon which (i) the default has been cured to
the satisfaction of the Designated Senior Lender or waived by the Designated
Senior Lender in writing, (ii) if such default is not a payment default and the
Designated Senior Lender within one year after giving notice to the Company of
the default shall not have accelerated the maturity of the Senior Debt, or (iii)
all Senior Debt has been paid in full. Notwithstanding the foregoing, the
Designated Senior Lender may invoke such prohibition no more than once during
any consecutive 24 month period, unless a payment default shall have occurred
and is continuing. The Company shall promptly notify the Payee, or any
subsequent holder of which the Company has received notice and an address, of
the Company's receipt of such a notice from the Designated Senior Lender. All
such notices from the Designated Senior Lender shall be deemed to have been duly
delivered only (i) at the time delivered by hand, if personally delivered, (ii)
when received, if deposited in the mail, first-class postage prepaid, return
receipt requested, (iii) when transmission is verified, if telecopied, and (iv)
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery. The term "Designated Senior Lender" shall initially mean the
Initial Senior Lender and, subsequent to the refinancing in full of the Senior
Debt described in clauses (a)(ii) and (iii) of the definition of Senior Debt set
forth in subsection 1.01, Designated Senior Lender shall mean any lender (or
lenders acting collectively) that hold(s) Senior Debt having an aggregate
outstanding principal amount and aggregate outstanding commitment(s) of not less
than $5,000,000 or any trustee, agent or representative of such lender or
lenders, the name and address of whom shall have been given to the Company by
the preceding Designated Senior Lender.
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<PAGE>
1.04. Liquidation Claims. If there shall occur any receivership,
------------------
insolvency, assignment for the benefit of creditors, bankruptcy (voluntary or
involuntary), reorganization, or arrangements with creditors (whether or not
pursuant to bankruptcy or other insolvency laws), sale of all or substantially
all of the assets, dissolution, liquidation, or any other marshalling of the
assets and liabilities of the Company (any of the foregoing, a "Liquidation
Event"), (i) the Senior Lender shall be entitled to receive payment in full in
cash of all Senior Debt then outstanding before the holder of this Note shall be
entitled to receive any payment or distribution, whether in cash, securities
(other than an equity interest in the Company, or indebtedness of the Company
that has been subordinated to all Senior Debt upon the same terms as this Note
or terms otherwise acceptable to the Senior Lender, distributed in settlement of
claims described in this subsection 1.04) or other property, in respect of the
principal of, interest on or other amounts due with respect to this Note at the
time outstanding, (ii) any payment or distribution, whether in cash, securities
(other than an equity interest in the Company, or indebtedness of the Company
that has been subordinated to all Senior Debt upon the same terms as this Note
or terms otherwise acceptable to the Senior Lender, distributed in settlement of
claims described in this subsection 1.04) or other property which would
otherwise (but for this subsection 1.04) be payable or deliverable in respect of
the amounts due under this Note shall be paid or delivered directly to the
Senior Lender (ratably according to the aggregate amounts remaining unpaid on
account of the Senior Debt held by each such Senior Lender) or to a trustee or
other representative for the Senior Lender, (iii) the holder of this Note agrees
to hold for the account of the Senior Lender any and all payments and
distributions received by such holder which may be payable or deliverable upon
or with respect to this Note, to file appropriate claims or proofs of claim in
respect of this Note and to execute and deliver to the Senior Lender such powers
of attorney, assignments and other instruments as the Senior Lender may
reasonably request to enable it to enforce any and all claims upon or in respect
of this Note (other than voting rights in any such proceeding), and (iv) the
Senior Lender is hereby irrevocably authorized and empowered (in its name or in
the name of the holder of this Note or otherwise) to take any of the actions
described in clause (iii) above upon the failure of the holder promptly to take
any such actions. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the sale, conveyance or lease of its property as an entirety,
or substantially as an entirety, to another corporation upon the terms and
conditions provided below shall not be deemed a dissolution, winding up,
liquidation or reorganization for the purposes of this subsection 1.04 if such
consolidation, merger, sale, conveyance or lease does not violate the provisions
of the Senior Debt or any agreement pursuant to which the Senior Debt is issued.
Any payment or distribution, whether in cash, securities (other than an equity
interest in the Company, or indebtedness of the Company that has been
subordinated to all Senior Debt upon the same terms as this Note or terms
otherwise acceptable to the Senior Lender, distributed in settlement of claims
described in this subsection 1.04) or other property received by the holder of
this Note in contravention of any of the terms of this subsection 1.04 shall be
received and held by the holder of this Note in trust as trustee for the benefit
of the Senior Lender and shall be promptly turned over to the Senior Lender (pro
---
rata in accordance with the Senior Debt held by them or as they may otherwise
- ----
direct if there is more than one Senior Lender) for application to the payment
of Senior Debt.
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<PAGE>
1.05 Judgments. If at any time hereafter the holder of this Note obtains
---------
a judgment against the Company for the indebtedness evidenced by this Note, such
judgment shall be subject to the subordination rights of the Senior Lender to
the same extent as is this Note.
1.06 Modifications. The subordination rights of the Senior Lender, and
-------------
the obligations of the holder of this Note under this Section One, shall be
effective and binding upon any modification, extension, or replacement note of
or for this Note and may not be modified or cancelled without the written
consent of the Senior Lender.
1.07 Subrogation. Upon the repayment in full in cash of all Senior Debt
-----------
at the time outstanding, the holder of this Note shall be subrogated to the
rights of the Senior Lender (to the extent of payments or distributions
previously made to the Senior Lender pursuant to the provisions of this Section
One) to receive payments or distributions of assets of the Company applicable to
the Senior Debt until this Note shall be repaid in full. No payment over
pursuant to the provisions of this Section One to the Senior Lender by the
holder of this Note and for the purposes of such subrogation, no payments or
distributions to the Senior Lender of any cash, property or securities to which
the holder of this Note would be entitled except for the provisions of this
Section One, shall, as between the Company, its creditors other than the Senior
Lender and the holder of this Note, be deemed to be a payment by the Company to
or for the account of the Senior Lender and no payments or distributions
applicable to Senior Debt which the holder of this Note receives by reason of
its being subrogated to the rights of the Senior Lender pursuant to the
provisions of this subsection 1.07 shall, as between the Company, its creditors
other than the Senior Lender and the holder of this Note, be deemed to be a
payment by the Company to or for the account of the holder of this Note; it
being understood that the provisions of this Section One are intended solely for
the purpose of defining the relative rights of the holder of this Note, on the
one hand, and the Senior Lender, on the other hand. In each case subject to the
rights of the Senior Lender under this Section One, nothing contained in this
Section One or elsewhere in this Note, is intended to or shall impair, as
between the Company and the holder of this Note, the obligation of the Company,
which is absolute and unconditional, to pay to the holder of this Note the
principal of, and interest, on this Note as and when the same shall become due
and payable in accordance with the terms of this Note, or is intended to or
shall affect the relative rights of the holder of this Note and creditors of the
Company other than the Senior Lender, nor shall anything in this Note prevent
the holder of this Note from exercising all remedies otherwise permitted by
applicable law upon default under this Note.
1.08 Right of Payee. The Company shall give prompt written notice to the
--------------
Payee of any Liquidation Event. The Payee shall be entitled to assume that no
such event has occurred unless the Company or any one or more Senior Debt
holders or any representative therefor has given such notice. Upon any payment
or distribution of assets of the Company referred to in subsection 1.04, the
Payee shall be entitled to rely upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, delivered to the Payee, for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Debt and other indebtedness of the Company, the amount thereof or payable
thereon, the amount or
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<PAGE>
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Section One.
1.09 Obligations of Payee and Holder. By acceptance of this Note, the
-------------------------------
holder hereof agrees to be bound by the obligations of the Payee and holder of
this Note set forth herein.
1.10 Reliance of Senior Lender. The Payee, by its acceptance of this
-------------------------
Note, shall be deemed to acknowledge and agree that the foregoing subordination
provisions are, and are intended to be, an inducement to and a consideration of
each Senior Lender, whether the Senior Debt held by such Senior Lender was
created or acquired before or after the creation of the indebtedness evidenced
by this Note and whether such Senior Lender is now known or hereafter becomes
known, and each Senior Lender shall be deemed conclusively to have relied on
such subordination provisions in acquiring and holding, or in continuing to
hold, such Senior Debt and shall be entitled to enforce the provisions of
Section One.
1.11 Reinstatement. The provisions of this Agreement shall continue to be
-------------
effective or be reinstated, as the case may be, if at any time any payment in
respect of Senior Debt is rescinded or must otherwise be returned by the Senior
Lender in the event of a Liquidation Event, all as though such payment had not
been made.
1.12 Subordination Not Impaired. All rights and interests of the Senior
--------------------------
Lender under this Section One with respect to Senior Debt and all agreements and
obligations of the Payee and each subsequent holder of this Note shall remain in
full force and effect irrespective of (i) any change in the time, manner or
place of payment of or any other term of Senior Debt or any amendment or waiver
of or any consent to departure from any of the terms thereof or (ii) any
exchange, release or non-perfection of any security interest or lien in any
collateral securing Senior Debt or any release or amendment or waiver of or
consent to departure from any guarantee for all or any Senior Debt.
SECTION TWO
Acceleration
------------
2.01 Events of Default. If any of the following events shall occur and be
-----------------
continuing:
(a) The Company shall fail to pay any principal of this Note when due in
accordance with the terms hereof (including without limitation any
mandatory prepayment), or the Company shall fail to pay any interest on
this Note within ten days after any such interest becomes due; provided,
however, that to the extent that the holder of this Note shall no longer be
entitled to receive or accept any payment hereunder pursuant to subsection
1.03, and, on or prior to the date of expiration of the one year period
referenced in such subsection 1.03, the Company (with the consent of the
Senior Lender) shall pay all delinquent amounts due to the holder of this
Note (without
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<PAGE>
giving regard to any acceleration of this Note), then any acceleration of
this Note shall automatically be deemed rescinded and such default shall
automatically be deemed cured; or
(b) The Company shall default in the observance or performance of any
agreement contained in this Note (other than as provided elsewhere in this
subsection 2.01) and such default shall continue unremedied for a period of
45 days; or
(c) The Company shall be in default on the Senior Debt and the Senior Debt
shall have been declared due and payable prior to the date of its scheduled
maturity or the Company shall have failed to pay the Senior Debt at
maturity and such failure shall not have been remedied or waived for a
period of 45 days; or
(d) (i) The Company shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Company shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the
Company any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Company any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) the Company shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii) or (iii) above;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (d) of this Section with respect to the
Company, automatically the principal amount hereof (with accrued interest
thereon) and all other amounts owing under this Note shall immediately become
due and payable, and (B) if such event is any other Event of Default, the Payee
may, by notice to the Company, declare the principal amount hereof (with accrued
interest thereon) and all other amounts owing under this Note to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived.
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<PAGE>
SECTION THREE
Definitions
-----------
3.01 "Applicable Rate" means (i) from the date hereof through and
including the second anniversary of the date hereof, a rate per annum equal to
12% and (ii) after such date, a rate per annum equal to 13%.
3.02 "Business Day" means any day on which the New York Stock Exchange is
open for trading and on which commercial banks in the Commonwealth of
Massachusetts, the State of New York or the District of Columbia are not
authorized or required by law to close.
3.03 "Event of Default" means any of the events specified in subsection
2.01, provided that any requirement for the giving of notice, the lapse of time,
--------
or both, or any other condition, has been satisfied.
3.04 "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
SECTION FOUR
Prepayment
----------
4.01 Mandatory Prepayment. Provided that no default exists with respect
--------------------
to the Senior Debt that has not been cured to the satisfaction of the Designated
Senior Lender or waived by the Designated Senior Lender in writing or if such
default is not a payment default, for which within one year after giving notice
to the Company of such default, the Designated Lender shall not have accelerated
the maturity of the Senior Debt, if the Company shall (i) obtain financing other
than the $4,700,000 subordinated note payable to the Estate and any refinancing
thereof (the "Seller Note"), subordinated to all Senior Debt upon the same terms
as this Note or terms otherwise acceptable to the Senior Lender, or (ii) raise
additional equity from the sale of its capital stock or of rights, options or
warrants entitling the holder to subscribe for or purchase capital stock of the
Company in excess of an amount sufficient to prepay the Seller Note, excluding
upon the exercise of stock options granted to employees, officers, directors or
consultants of the Company and excluding the issuance of equity in connection
with the acquisition of stock or assets or to finance the acquisition of stock
or assets or to finance the acquisition of stock or assets, then the Company
shall prepay this Note in an amount equal to the net cash proceeds of such
subordinated debt or equity financing remaining after prepaying the Seller Note.
In addition, if the Senior Debt is paid in full in cash, the net cash proceeds
of any debt financing of the Company (other than proceeds applied to payment of
the Senior Debt) remaining after
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<PAGE>
prepaying the Seller Note shall be applied to prepay this Note. Any such
prepayment shall be made within 30 days after the receipt of such proceeds.
4.02 Optional Prepayment. The Company shall have the right at any time or
-------------------
from time to time, subject to the provisions of Section One, to prepay this Note
in whole or in part, together with all accrued and unpaid interest with respect
to such prepaid amount.
SECTION FIVE
Miscellaneous
-------------
5.01 Governing Law. This Note shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Massachusetts.
5.02 Successors and Assigns. This Note shall be binding upon and inure to
----------------------
the benefit of the Company and the Payee and their respective successors and
assigns, but may not be assigned by either party without the prior written
consent of the other, except that the Payee may assign its rights hereunder to
any corporation controlling, controlled by or under common control with the
Payee at any time.
5.03 Amendments. This Note may not be modified or discharged orally, but
----------
only by an agreement in writing executed by the party against whom enforcement
of any modification or discharge is sought.
5.04 Expenses of Collection. The Company agrees to pay all reasonable
----------------------
out-of-pocket expenses, including counsel fees, incurred by the Payee arising in
connection with the enforcement of this Note and the collection of amounts due
and unpaid hereunder.
5.05 Headings. The headings of the Sections and subsections of this Note
--------
are inserted for convenience only and do not constitute a part of this Note.
IN WITNESS WHEREOF, the Company has caused this Note to be signed under
seal in its corporate name by one of its officers thereunto duly authorized and
this Note to be dated as of the day and year first written above.
BRUNSWICK BIOMEDICAL CORPORATION
By /s/ James H. Miller
-----------------------
Name: James H. Miller
Title: President
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