<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1996
REGISTRATION NO. _______________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
TRINITY INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3743 75-0225040
(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
2525 STEMMONS FREEWAY
DALLAS, TEXAS 75207
(214) 631-4420
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------------
F. DEAN PHELPS
VICE PRESIDENT
TRINITY INDUSTRIES, INC.
2525 STEMMONS FREEWAY
DALLAS, TEXAS 75207
(214) 631-4420
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
Copies to:
CHARLES C. REEDER, ESQ.
LOCKE PURNELL RAIN HARRELL
(A PROFESSIONAL CORPORATION)
2200 ROSS AVENUE, SUITE 2200
DALLAS, TEXAS 75201
(214) 740-8522
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement and after
all other conditions to the merger referred to herein have been satisfied or
waived.
If the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ ]x
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Title of Each Proposed Maximum Proposed Amount of
Class of Shares to be Registered Amount to be Aggregate Offering Price Maximum Aggregate Registration
(1) Registered per Share (2) Offering Price (2) Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par 188,400 $31.625 $5,958,150 $2,055
value $1.00 per share (including
the attached Preferred Share
Purchase Rights)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
(1) THIS REGISTRATION STATEMENT RELATES TO (I) THE SHARES OF COMMON STOCK,
PAR VALUE $1.00 PER SHARE ("COMMON STOCK"), OF THE REGISTRANT AND (II)
THE PREFERRED SHARE PURCHASE RIGHTS THAT WILL BE ATTACHED TO AND
REPRESENTED BY THE CERTIFICATES ISSUED FOR THE COMMON STOCK (WHICH
PREFERRED SHARE PURCHASE RIGHTS HAVE NO MARKET VALUE INDEPENDENT OF
THE COMMON STOCK TO WHICH THEY ARE ATTACHED). PURSUANT TO RULE 416 OF
THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT ALSO COVERS
SUCH ADDITIONAL INDETERMINATE NUMBER OF SHARES OF COMPANY COMMON STOCK
AS MAY BE REQUIRED TO PREVENT DILUTION IN THE EVENT OF A STOCK
DIVIDEND, SPLIT-UP, RECAPITALIZATION, REORGANIZATION, CONSOLIDATION OR
MERGER, AS PROVIDED IN THE WARRANTS, PURSUANT TO WHICH THE SHARES
BEING REGISTERED HEREBY ARE ISSUABLE.
(2) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE
PURSUANT TO RULE 457(F) OF THE SECURITIES ACT OF 1933 BASED ON THE
AVERAGE OF THE HIGH AND LOW SALES PRICES OF THE COMMON STOCK ON THE
NEW YORK STOCK EXCHANGE, AS REPORTED BY THE NEW YORK STOCK EXCHANGE
COMPOSITE TAPE, ON AUGUST 6, 1996.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE> 3
PROSPECTUS
188,400 SHARES
TRINITY INDUSTRIES, INC.
_______________________________________________
COMMON STOCK
($1.00 PAR VALUE PER SHARE)
___________________________
This Prospectus relates to an aggregate of 188,400 shares (the "Shares") of
the common stock, $1.00 par value per share ("Company Common Stock"), of
Trinity Industries, Inc., a Delaware corporation (the "Company") which may be
offered from time to time by any or all of the Selling Stockholders named
herein (the "Selling Stockholders"). The Selling Stockholders will offer and
sell shares of Company Common Stock, as described herein under the heading
"Plan of Distribution." The Company will not receive any of the proceeds from
the sale of the Shares by the Selling Stockholders. All expenses of
registration incurred in connection with this offering are being borne by the
Company, but all selling and other expenses incurred by the Selling
Stockholders will be borne by such Selling Stockholders.
All of the shares owned by the Selling Stockholders which are registered
hereby will have been acquired as a result of the exercise of warrants issued
to the Selling Stockholders as converted pursuant to the Merger Agreement,
dated June 17, 1996 (the "Merger Agreement"), by and among the Company, Trinity
Y, a Delaware corporation and a wholly-owned subsidiary of the Company
("Trinity Y"), and Transcisco Industries, Inc., a Delaware corporation
("Transcisco"), pursuant to which Trinity Y would be merged (the "Merger") with
and into Transcisco, which would continue in existence as a wholly-owned
subsidiary of the Company. The Merger is more fully described in the
Registration Statement on Form S-4, dated July 17, 1996, as amended by
Post-Effective Amendment No. 1 to such Registration Statement, dated July 19,
1996, and incorporated by reference herein, whereby certain warrants issued by
Transcisco, to purchase common stock of Transcisco, $.01 par value per share
("Transcisco Common Stock"), will be converted into warrants to purchase shares
of Company Common Stock at the effective time of the Merger. In the Merger,
each share of Transcisco Common Stock issued and outstanding immediately prior
to the effective time of the Merger will be converted into, exchanged for, and
represent the right to receive 0.1884 of a share of Company Common Stock
(together with the attached Preferred Share Purchase Rights).
Shares of Company Common Stock are listed and traded on the New York Stock
Exchange ("NYSE") under the symbol "TRN". On August 6, 1996, the closing price
for the shares of Company Common Stock on the NYSE, as reported by the NYSE
Composite Tape, was $31.50 per share. Prospective purchasers of Company Common
Stock are urged to obtain current information as to market prices of Company
Common Stock.
Each Selling Stockholder and any broker or dealer executing selling orders
on behalf of the Selling Stockholders may be deemed to be an "underwriter"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"). Compensation received by any such broker or dealer (including profits
on resales) may be deemed to be underwriting commissions and discounts under
the Securities Act.
SEE "RISK FACTORS" ON PAGE 5 HEREOF FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF COMPANY COMMON STOCK
OFFERED HEREBY.
________________________________________________________________________________
THE SECURITIES TO WHICH THIS PROSPECTUS RELATES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
________________________________________________________________________________
<PAGE> 4
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. This Prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such state.
__________________________________________________
THE DATE OF THIS PROSPECTUS IS AUGUST 12, 1996
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<PAGE> 5
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended, (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public Reference Branch
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company
Common Stock is listed on the New York Stock Exchange, and copies of such
reports, proxy and information statements and other information may be
inspected at the New York Stock Exchange, 20 Broad Street, New York, New York
10005. Additionally, copies of reports, proxy and information statements and
other information filed with the Commission electronically may be inspected by
accessing the Commission's Internet site at http:\\www.sec.gov.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner, upon the written
or oral request of such person, a copy of all documents incorporated by
reference herein (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference into the information that this
Prospectus incorporates). Requests for such documents should be addressed to
F. Dean Phelps, Vice President of the Company, at P.O. Box 568887, Dallas,
Texas 75356-8887; telephone number (214) 631-4420.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents and information heretofore filed by the Company
(File No. 1-6903) with the Commission pursuant to the Exchange Act are hereby
incorporated by reference into this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1996; provided that only the following sections of the Company's 1996
Annual Report to Stockholders, incorporated by reference in the Annual Report
on Form 10-K, are incorporated by reference in this Prospectus: "Corporate
Profile" (page 3), "Financial Summary" (page 15), "Management's Discussion and
Analysis of Financial Condition" (pages 16-17), "Report of Independent
Auditors" (page 29) and financial statements and supplementary data (pages
18-29). Portions of the Company's 1996 Annual Report to Stockholders not
enumerated above are not hereby incorporated.
(2) The Company's Proxy Statement for the Company's 1996 Annual Meeting of
Stockholders; provided that only the following portions of such Proxy Statement
are incorporated by reference in this Prospectus: "Voting Securities and
Stockholders" (pages 2-3), "Election of Directors" (pages 3-4), and "Executive
Compensation and Other Matters" (pages 6- 14). Portions of the Proxy Statement
for the Company's 1996 Annual Meeting of Stockholders not enumerated above are
not hereby incorporated.
(3) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1996.
(4) The Company's Current Report on Form 8-K, dated June 29, 1996.
(5) The Company's Registration Statement on Form S-4, dated July 17, 1996
(Registration No. 333-8321), as amended by Post-Effective Amendment No. 1,
dated July 19, 1996.
(6) The description of the Company's Common Stock, and the attached
Preferred Share Purchase Rights, to be offered hereby, contained in the
Company's Registration Statement on Form S-4, dated July 17, 1996 (Registration
No. 333-8321), as amended by Post-Effective Amendment No. 1, dated July 19,
1996.
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<PAGE> 6
(7) All other documents filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act after March 31, 1996 and prior to the date of this
Prospectus.
(8) All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus and
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in the
Prospectus and to be part hereof from the date of filing such documents.
Any statement contained in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as
modified or superseded, to constitute a part of this Prospectus.
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits thereto, referred to as
the "Registration Statement") under the Securities Act.
This Prospectus contains information concerning the Company and sales of
Company Common Stock by the Selling Stockholders but does not contain all the
information set forth in the Registration Statement, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. The Registration Statement, including various exhibits and
schedules, may be inspected at the Commission's office in Washington, D.C.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to herein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
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<PAGE> 7
THE COMPANY
The Company was originally incorporated under the laws of the State of
Texas in 1933. On March 27, 1987, it became a Delaware corporation by merger
into a wholly-owned subsidiary of the same name. Its mailing address is P.O.
Box 568887, Dallas, Texas 75356-8887, its principal executive offices are
located at 2525 Stemmons Freeway, Dallas, Texas 75207, and its telephone number
at such address is (214) 631-4420.
The Company is engaged in the manufacture, marketing and leasing of a
variety of products consisting principally of (i) "Railcars" (i.e., railroad
freight cars), principally tank cars, hopper cars, gondola cars and intermodal
cars and miscellaneous other freight cars; (ii) "Marine Products" such as
boats, barges and various offshore service vessels for ocean and inland
waterway service and military vessels for the United States Government and, to
a limited extent, various size vessels for international transportation
companies; (iii) "Construction Products" such as highway guardrail, beams,
girders and columns used in construction of highway and railway bridges, power
plants, mills, etc., highway safety products, passenger loading bridges and
conveyor systems for airports and other people and baggage conveyance
requirements, ready mix concrete production and distribution, and providing raw
materials to owners, contractors and sub-contractors for use in the building
and foundation industry; (iv) "Containers" such as (a) extremely large, heavy
pressure vessels and other heavy welded products, including industrial
silencers, desalinators, evaporators, and gas processing systems, (b) pressure
and non-pressure containers for the storage and transportation of liquefied
gases, brewery products and other liquid and dry products, and (c) heat
transfer equipment for the chemical, petroleum and petrochemical industries;
(v) "Metal Components" such as weld fittings (tees, elbows, reducers, caps,
flanges, etc.,) used in pressure piping systems and container heads (the ends
of pressure and non-pressure containers) for use internally and by other
manufacturers of containers; and (vi) "Leasing" of its manufactured railcars
and barges to various industries.
Further information concerning the Company is incorporated by reference
herein as and only to the extent set forth on page 3 hereof.
RECENT DEVELOPMENTS
On June 25, 1996, the Company announced that its Board of Directors
approved an initial public offering of all of the common stock of a newly
incorporated company that will acquire the assets and liabilities of a portion
of the Company's Marine Products segment. The newly-formed company, Halter
Marine Group, Inc. ("Halter"), will engage in the business of constructing and
repairing ocean-going marine vessels. Halter filed a registration statement on
Form S-1 with the Commission on June 27, 1996. The offering of Halter's common
stock would be effected only pursuant to a prospectus included in a
registration statement declared effective by the Commission.
RISK FACTORS
RISKS ASSOCIATED WITH RAILCAR SEGMENT
Revenues derived from the manufacture and sale of railcars and railcar
parts, principally tank cars and freight cars, accounted for approximately 50%,
50% and 41% of the Company's revenues in fiscal years 1996, 1995 and 1994,
respectively. Annual production of railcars on an industry-wide basis has
widely fluctuated over the past two decades. The period from 1980 - 1988 was
negatively impacted by production overcapacity, the United States embargo on
the exportation of grain to the Soviet Union and changes in the tax laws
regarding investment tax credit and depreciation methods and lives. Since that
time, however, the overall use of railroads for freight transportation has
increased, industry overcapacity has been reduced and a large number of
railcars have reached or neared the end of their useful economic lives. These
factors, coupled with relatively
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<PAGE> 8
strong general economic conditions, have resulted in increased railcar
production industry-wide. There can be no assurance, however, that such
factors and economic conditions will remain favorable or that significant
fluctuations in such factors and conditions will not occur that may have a
material adverse affect on the results of operations and financial condition of
the Company.
The Company markets to three broad categories of customers - railroads,
leasing companies, and end users, other than railroads, of railcars who are
shippers. Many times the economic factors and conditions motivating one
category of customers to acquire railcars may not equally motivate one or both
of the other categories of customers to acquire railcars. This factor
contributes to the limited predictability of railcar order flows. As a result,
there can be no assurance that the Company would not be adversely affected by a
temporary shortage of railcar orders. In addition, due to the large size of
railcar orders, and variations in the mix of car types ordered, the number and
type of railcars produced in any given quarter (as well as the size of the
Company's railcar orders) may fluctuate greatly and, consequently, the
Company's quarterly revenues and income from operations may vary substantially.
The Company's revenues and income from the railcar segment are also subject to
the effects of the capital budgeting patterns of its railcar customers.
RISKS ASSOCIATED WITH MARINE PRODUCTS SEGMENT
The shipbuilding industry is a highly competitive industry. In general,
during the 1990's, the U.S. shipbuilding industry has been characterized by
substantial excess capacity because of the significant decline in U.S. Navy
shipbuilding spending and the difficulties experienced by U.S. shipbuilders in
competing successfully for international commercial projects against foreign
shipyards, many of which are heavily subsidized by their governments. As a
result of these factors, competition by U.S. shipbuilders for domestic
commercial projects has remained intense. Such competition has resulted in
substantial pressure on pricing, and contracts for the construction of vessels
are usually awarded on a competitive bid basis. Although the Company believes
customers consider, among other things, the availability and technical
capabilities of equipment and personnel, efficiency, condition of equipment,
safety record and reputation, price competition is currently a primary factor
in determining which qualified shipbuilder is awarded a contract.
RISKS ASSOCIATED WITH CONSTRUCTION PRODUCTS SEGMENT
Demand for the Company's construction products is directly related to
activity in the construction industry and general economic conditions. Various
economic factors beyond the Company's control affect the markets for its
construction products, including the level of new residential, commercial and
infrastructure construction activity, which is in turn affected by movement in
interest rates, the availability of short- and long-term financing and the
availability of public funds for infrastructure projects.
ENVIRONMENTAL MATTERS
The Company's subsidiaries are subject to comprehensive and frequently
changing federal, state and local environmental laws and regulations, including
those governing emissions of air pollutants, discharges of wastewater and storm
waters, and the disposal of non-hazardous and hazardous waste. The Company
anticipates that it may incur additional costs in the future to comply with
currently existing laws and regulations, new regulatory requirements arising
from recently enacted statutes, particularly those relating to the Clean Air
Act Amendments of 1990, and any new statutory requirements.
COMPETITION
The Company faces competition in each of its segments and has numerous
competitors, and some competitors in certain segments are larger and have
greater financial resources than the Company. There can be no assurance that
the Company will be able to continue to compete successfully in its markets.
Because the Company competes, in part, on the technical advantages and cost of
its products, significant technical advances by competitors or the achievement
by such competitors of improved operating efficiencies that enable
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<PAGE> 9
them to reduce prices could reduce the Company's competitive advantage and,
thereby, adversely affect the Company's business and financial results.
SELLING STOCKHOLDERS
The Selling Stockholders are Furman Selz SBIC, L.P., a Delaware limited
partnership ("Furman Selz L.P."), and James Dowling, an employee of Furman Selz
Investments LLC, the general partner in Furman Selz L.P. Pursuant to a Note
and Warrant Purchase Agreement (more fully described in Exhibit 2(b) attached
hereto and incorporated herein by reference), dated August 1, 1995 (the
"Warrant Purchase Agreement"), by and among Transcisco Rail Services Company, a
California corporation ("TRS"), Transcisco Leasing Company, a Delaware
corporation ("TLC") Transcisco Trading Company, a Delaware corporation ("TTC"),
Furman Selz L.P. and James Dowling, Furman Selz L.P. purchased warrants to
purchase up to 966,667 shares of Transcisco Common Stock and James Dowling
purchased warrants to purchase up to 33,333 shares of Transcisco Common Stock
(such warrants are herein collectively referred to as the "Warrants").
In connection with the purchase of the Warrants, the Selling Stockholders
received demand and piggy-back registration rights with respect to the shares
of Transcisco Common Stock to be received upon exercise of the Warrants,
pursuant to a Registration Rights Agreement (more fully described in Exhibit D
to the Warrant Purchase Agreement attached hereto as Exhibit 2(b) and
incorporated herein by reference), dated August 1, 1995 (the "Registration
Rights Agreement"), by and between Transcisco and the Selling Stockholders.
The Merger Agreement provides that, at the effective time (the "Effective
Time") of the Merger, each share of Transcisco Common Stock issued and
outstanding immediately prior to the Effective Time will be converted into,
exchanged for and represent the right to receive 0.1884 of a share of Company
Common Stock (together with the attached Preferred Share Purchase Rights). The
Merger Agreement further provides that, at the Effective Time, the Warrants
will represent the right to purchase, on the same terms and conditions as were
applicable to such Warrants, the same number of shares of Company Common Stock,
as the Selling Stockholders would have been entitled to receive pursuant to the
Merger had such stockholders exercised the Warrants prior to the Effective Time
(188,400 shares). The shares of Company Common Stock being registered hereby
are being registered as a result of the exercise by the Selling Stockholders,
pursuant to the Registration Rights Agreement, of their demand registration
rights with respect to the shares of Company Common Stock that their Warrants
will represent the right to receive at the Effective Time.
Except for the transactions contemplated pursuant to this Prospectus, the
Merger Agreement or as described herein, to the best knowledge of the Company,
there is not, and there has not been in the past three years, any material
relationship between the Company and its affiliates, on the one hand, and any
of the Selling Stockholders, on the other.
All of the shares of Company Common Stock offered hereby are being sold by
the Selling Stockholders. Assuming the Merger becomes effective on September
3, 1996, the following table sets forth, as of September 3, 1996, (i) the name
of each Selling Stockholder, (ii) the number of shares of Company Common Stock
beneficially owned by each Selling Stockholder prior to the offering, (iii) the
number of shares of Company Common Stock being offered by each Selling
Stockholder and (iv) assuming that all shares offered for sale are sold, the
number of shares of Company Common Stock beneficially owned after the offering
by each Selling Stockholder:
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<TABLE>
<CAPTION>
Shares Beneficially Shares Shares Beneficially
Owned Prior Being Owned
To Offering (1) Offered After Offering (2)
--------------- ------- ------------------
Names of Selling
Stockholders Number Percent
------------ ------- -------
<S> <C> <C> <C> <C>
Furman Selz SBIC, L.P. 182,120 182,120 0 0.00%
James Dowling 6,280 6,280 0 0.00%
------- ------- ------ ----
188,400 188,400 0 0.00%
</TABLE>
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days upon the exercise of options or
warrants. Unless otherwise noted, the Company believes that all persons
named in the table have sole voting and investment power with respect to
all shares of Company Common Stock beneficially owned by them, subject to
community property laws where applicable.
(2) Assumes the sale of all the shares of Company Common Stock offered hereby.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they intend
to make private sales directly or through brokers or dealers, who may act as
agent or as principal, and such sales will be at such prices (whether at fixed
offering prices, prevailing market prices, varying prices determined at time of
sale or otherwise) and on such terms as may be determined by the Selling
Stockholders at the time of such sales. Such brokers or dealers will receive
commissions from the Selling Stockholders in customary and ordinary amounts to
be negotiated immediately prior to the sale. The Selling Stockholders may also
sell all or a portion of the shares offered hereby from time to time on the
NYSE and those sales will be made at the then prevailing market prices and on
such terms as may be determined by the Selling Stockholders at the time of such
sales. In connection with any sales of Company Common Stock, the Selling
Stockholders and any broker or dealer participating in such sales may be deemed
to be "underwriters" within the meaning of the Securities Act. Any commissions
paid or any discounts or concessions allowed to any such broker or dealer, and
any profits received on the resale of such shares, may be deemed to be
underwriting discounts and commissions under the Securities Act.
The Company has advised the Selling Stockholders that the anti-manipulative
provisions of Rules 10b-2, 10b-6 and 10b-7 under the Exchange Act may apply to
their sales in the market, has furnished each Selling Stockholder with a copy
of such Rules and has informed them of the need for delivery of copies of this
Prospectus.
The Company has been advised by the Selling Stockholders that no specific
brokers or dealers have been designated by the Selling Stockholders nor has any
agreement been entered into with respect to brokerage commissions or for the
exclusive or coordinated sale of any shares of Company Common Stock which may
be offered pursuant to this Prospectus. Upon notification by a Selling
Stockholder to the Company that any material arrangement has been entered into
with a broker or dealer for the sale of shares through a cross or block trade,
a supplemental prospectus will be filed under Rule 424(c) under the Securities
Act setting forth the name of the participating broker or dealer, the number of
shares involved, the price at which such shares were sold by the Selling
Stockholder, the commissions paid or discounts or concessions allowed by the
Selling Stockholder to such broker or dealer, and where applicable, that such
broker or dealer did not conduct any investigation to verify the information
set out in this Prospectus.
Any securities covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this Prospectus.
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<PAGE> 11
There can be no assurance that any of the Selling Stockholders will sell
any or all of the shares of Company Common Stock offered by them hereunder.
The aggregate proceeds to the Selling Stockholders from the sale of the
shares of Company Common Stock offered hereby will be the selling price of such
shares of Company Common Stock less the aggregate commissions, discounts and
other selling expenses related thereto, if any. None of the proceeds from the
sale of the shares of Company Common Stock offered hereby will be received by
the Company.
The Selling Stockholders have agreed with the Company that during such time
as such Selling Stockholders may be engaged in the attempt to sell shares
registered hereunder, such persons will:
(i) not engage in any stabilization activity in connection with any of
the Company securities;
(ii) cause to be furnished to each person to whom shares included
herein may be offered, and to each broker-dealer, if any, through whom shares
are offered, such copies of the Prospectus, as supplemented or amended, as may
be required by such person; and
(iii) not bid for or purchase any of the Company's securities or any
rights to acquire the Company's securities, or attempt to induce any person to
purchase any of the Company's securities or rights to acquire the Company's
securities other than as permitted under the Exchange Act.
USE OF PROCEEDS
The Company will not receive any of the net proceeds from the sale of the
shares of Company Common Stock offered hereby.
LEGAL MATTERS
The legality of the shares of Company Common Stock offered hereby will be
passed upon for the Company by Locke Purnell Rain Harrell (A Professional
Corporation), Dallas, Texas.
EXPERTS
The consolidated financial statements and schedule of the Company and its
subsidiaries, appearing in or incorporated by reference in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1996 have been audited
by Ernst & Young LLP, independent auditors, as set forth in their reports
thereon incorporated by reference elsewhere herein. Such consolidated
financial statements and schedule are incorporated by reference herein in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
Audited consolidated financial statements and schedule of the Company to be
included in subsequently filed documents filed with the Securities and Exchange
Commission will be incorporated herein in reliance upon the reports of Ernst &
Young LLP pertaining to such financial statements (to the extent covered by
consents filed with the Securities and Exchange Commission) given upon the
authority of such firms as experts in accounting and auditing.
-9-
<PAGE> 12
===============================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY SELLING STOCKHOLDER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, ANY SECURITIES TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................... 3
Incorporation of Certain Documents by Reference............ 3
The Company................................................ 5
Recent Developments........................................ 5
Risk Factors............................................... 5
Selling Stockholders....................................... 7
Plan of Distribution....................................... 8
Use of Proceeds............................................ 9
Legal Matters.............................................. 9
Experts.................................................... 9
</TABLE>
===============================================================================
===============================================================================
188,400 SHARES
TRINITY INDUSTRIES, INC.
COMMON STOCK
---------------
PROSPECTUS
---------------
August 12, 1996
===============================================================================
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses in connection with the
registration of the shares of Company Common Stock being offered hereby. All
amounts are estimates except for the Registration Fee. All expenses of
registration incurred in connection with this offering are being borne by the
Company, in accordance with the terms of the Registration Rights Agreement, but
all selling and other expenses incurred by any Selling Stockholder will be
borne by such Selling Stockholder.
<TABLE>
<S> <C>
Registration Fee $ 2,055
-----------
Legal Fees and Expenses $ 10,000
-----------
Accounting Fees and Expenses $ 1,000
-----------
Miscellaneous Expenses $ 1,000
-----------
Total $ 14,055
-----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnity directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (collectively, a "Proceeding"), and other than an action by or in
the right of the corporation (a "derivative action"), if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal Proceeding,
had no reason to believe that their conduct was unlawful. With respect to
derivative actions, a standard similar to the foregoing is applicable, except
that indemnification only extends to expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement
of such action or suit, and court approval is required before there can be any
indemnification where the person seeking indemnification has been found to be
liable to the corporation. The statute states that it is not to be deemed
exclusive of any other rights that may be granted under any bylaw, agreement,
vote of stockholders or disinterested directors or otherwise.
Under Article VI of the Registrant's Bylaws, the Registrant is to indemnify
each person who is or was or has agreed to become a director, officer, employee
or agent of the Registrant or is or was serving or has agreed to serve at the
request of the Registrant in a similar capacity for another corporation,
partnership, joint venture, trust or other enterprise, to the fullest extent
authorized or permitted (i) by the DGCL or by any other applicable law or any
amendment thereof or (ii) by the Registrant's Certificate of Incorporation.
Article VI of the Registrant's Bylaws further states that the Registrant will
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed Proceeding (other than an action by or
in the right of the Registrant) by reason of the fact that he is or was or has
agreed to become a director, officer, employee or agent of the Registrant, or
is or was serving or has agreed to serve at the request of the Registrant as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to have
been taken or omitted in such capacity, against costs, charges, expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with
such Proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Registrant, and, with respect to any criminal Proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any Proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the
II-1
<PAGE> 14
Registrant, and, with respect to any criminal Proceeding, had reasonable cause
to believe that his conduct was unlawful.
The Registrant will indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Registrant to procure a judgment in its favor by
reason of the fact that he is or was or has agreed to become a director,
officer, employee or agent of the Registrant, or is or was serving or has
agreed to serve at the request of the Registrant as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, against costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection with the defense or settlement of such action or suit and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Registrant, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Registrant
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses that the Court of Chancery of
Delaware or such other court shall deem proper.
The indemnification described above (unless ordered by a court) shall be
paid by the Registrant unless a determination is made (i) by the Registrant's
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such Proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
Registrant's stockholders, that indemnification of the director, officer,
employee or agent is not proper in the circumstances because he has not met the
applicable standard of conduct set forth above.
To the extent that a director, officer, employee or agent of the Registrant
has been successful on the merits or otherwise, including, without limitation,
the dismissal of an action, without prejudice, in defense of any Proceeding
described above, or in defense of any claim, issue or matter therein, he shall
be indemnified against all costs, charges and expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
therewith.
Under the Registrant's Bylaws, the Registrant is to advance expenses to
indemnitees to the fullest extent authorized or permitted (i) by the DGCL or by
any other applicable law or any amendment thereof or (ii) by the Registrant's
Certificate of Incorporation. Article VI of the Registrant's Bylaws provides
that costs, charges and expenses (including attorneys' fees) incurred by a
person seeking indemnification under Article VI of the Registrant's Bylaws in
defending a Proceeding shall be paid by the Registrant in advance of the final
disposition of such Proceeding; provided, however, that the payment of such
costs, charges and expenses incurred by a director or officer in his capacity
as a director or officer (and not in any other capacity in which service was or
is rendered by such person while a director or officer) in advance of the final
disposition of such Proceeding shall be made only upon receipt of an
undertaking by or on behalf of the director or officer to repay all amounts so
advanced in the event that it shall ultimately be determined that such director
or officer is not entitled to be indemnified by the Registrant. Such costs,
charges and expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Registrant's Board of Directors deems
appropriate. The Registrant's Board of Directors may, upon approval of such
director, officer, employee or agent of the Registrant, authorize the
Registrant's counsel to represent such person in any Proceeding, whether or not
the Registrant is a party to such Proceeding.
The indemnification and advancement of costs, charges and expenses provided
by the Registrant's Bylaws shall not be deemed exclusive of any other rights to
which a person seeking indemnification or advancement of costs, charges and
expenses may be entitled under any law (common or statutory), agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding office
or while employed by or acting as agent for the Registrant, and shall
II-2
<PAGE> 15
continue as to a person who has ceased to be a director, officer, employee or
agent as to actions taken while he was such a director, officer, employee or
agent, and shall inure to the benefit of the estate, heirs, executors and
administrators of such person. Repeal or modification of Article VI of the
Registrant's Bylaws or any repeal or modification of relevant provisions of the
DGCL or any other applicable laws shall not in any way diminish any rights to
indemnification of such director, officer, employee or agent or the obligations
of the corporation arising thereunder.
Section 102(b) (7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, but excludes specifically liability
for any (i) breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law, (iii) payments of unlawful dividends
or unlawful stock repurchases or redemptions, or (iv) transactions from which
the director derived an improper personal benefits. The provision does not
limit equitable remedies, such as an injunction or rescission for breach of a
director's fiduciary duty of care.
The Registrant's Certificate of Incorporation contains a provision
eliminating the personal liability of a director from breaches of fiduciary
duty, subject to the exceptions described above.
The Registrant has entered into Indemnity Agreements with all of its
officers and directors that establish contract rights to indemnification
substantially similar to the rights to indemnification provided for in the
Registrant's Bylaws.
The Registrant has in force an officers' and directors' liability insurance
policy insuring, up to specified amounts and with specified exceptions,
directors, and officers and former directors and officers of the Registrant and
its subsidiaries against damages, judgments, settlements and costs for which
they are not indemnified by the Registrant that any such persons may become
legally obligated to pay on account of claims made against them for any error,
misstatement or misleading statement, act or omission, or neglect or breach of
duty committed, attempted or allegedly committed or attempted by such persons
in the discharge of their duties to the Registrant in their capacities as
directors or officers, or any matter claimed against them solely by reason of
their serving in such capacities. The officers' and directors' liability
insurance policy also insures the Registrant, up to specified amounts and with
specified exceptions, against any indemnification payments made by the
Registrant to directors and officers and former directors and officers.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2(a) Agreement and Plan of Merger, dated as of June 17, 1996, by and
among the Registrant, Trinity Y, Inc. and Transcisco Industries,
Inc. (incorporated by reference to Annex A to the Proxy
Statement/Prospectus in Part I of the Registrant's Registration
Statement No. 333-8321, filed with the Commission on July 17,
1996).
**2(b) Note and Warrant Purchase Agreement, dated as of August 1, 1995,
among Transcisco, TRS, TLC and TTC and Furman Selz SBIC, L.P. and
James Dowling, which includes as Exhibit B-1 thereto the Form of
Series A Senior Subordinated Note, as Exhibit B-2 thereto the Form
of Series B Senior Subordinated Note, as Exhibit C thereto the
Form of Warrant and as Exhibit D thereto the Form of Registration
Rights Agreement.
II-3
<PAGE> 16
4(a) Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.A to the Registrant's Registration
Statement No. 33-10937, filed with the Commission on April 8,
1987).
4(b) Bylaws of the Registrant (incorporated by reference to Exhibit
3(b) to the Registrant's Registration Statement No. 333-8321,
filed with the Commission on July 17, 1996).
4(c) Specimen Stock Certificate for Common Stock (incorporated by
reference to Exhibit 3B to Registrant's Registration Statement No.
33-10937, filed with the Commission on April 8, 1987).
4(d) Rights Agreement, dated as of April 11, 1989, by and between the
Registrant and NCNB Texas National Bank, as Rights Agent
(incorporated by reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A, filed with the Commission on
May 2, 1989).
**5 Opinion and Consent of Locke Purnell Rain Harrell (A Professional
Corporation) with respect to the legality of the securities being
registered hereby.
**23(a) Consent of Locke Purnell Rain Harrell (A Professional Corporation)
(contained in its opinion included in Exhibit 5 above).
**23(b) Consent of Ernst & Young LLP.
**24 Powers of Attorney (included on the signature page of this
Registration Statement).
28 Form of Indemnification Agreement between the Registrant and each
of its officers and directors (incorporated by reference to
Exhibit 28.6 to the Registrant's Registration Statement No.
33-49384, filed with the Commission on July 9, 1992).
** Filed Herewith
(B) FINANCIAL STATEMENT SCHEDULES
Not Applicable.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement, and to include any
material information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to such
information in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment to this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of any
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is
II-4
<PAGE> 17
incorporated by reference in this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities as that time shall be deemed to the initial
bona fide offering thereof.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(6) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
II-5
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto, duly
authorized, in the City of Dallas, State of Texas, as of August 12, 1996.
TRINITY INDUSTRIES, INC.
By: /s/ F. Dean Phelps
---------------------------------
F. DEAN PHELPS
VICE PRESIDENT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS W. RAY WALLACE, JOHN T. SANFORD AND F. DEAN
PHELPS, AND EACH OF THEM, HIS ATTORNEYS-IN-FACT AND AGENTS, WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, TO EXECUTE IN THE NAME AND ON BEHALF OF SUCH
PERSON, IN ANY AND ALL CAPACITIES, ANY AND ALL AMENDMENTS TO THIS REGISTRATION
STATEMENT ON FORM S-3 NOW OR HEREAFTER FILED BY OR ON BEHALF OF TRINITY
INDUSTRIES, INC. (THE "COMPANY"), AND TO FILE THE SAME, WITH ALL EXHIBITS
THERETO, AND OTHER DOCUMENTS REQUIRED IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, AND ANY STATE OR OTHER SECURITIES
AUTHORITY, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, AND EACH OF THEM,
FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING
REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE PREMISES, AS FULLY TO ALL
INTENTS AND PURPOSES AS MIGHT OR COULD BE DONE IN PERSON, HEREBY RATIFYING AND
CONFIRMING ALL THAT EACH OF SAID ATTORNEYS-IN-FACT AND AGENTS, OR HIS
SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
(a) Principal Executive Officer
/s/ W. Ray Wallace Chairman, President, Chief August 12, 1996
-------------------------- Executive Officer and Director
W. RAY WALLACE
(b) Principal Financial Officer
/s/ John T. Sanford Senior Vice President August 12, 1996
----------------------
JOHN T. SANFORD
(c) Principal Accounting Officer
/s/ F. Dean Phelps Vice President August 12, 1996
--------------------------
F. DEAN PHELPS
</TABLE>
II-6
<PAGE> 19
<TABLE>
<S> <C> <C>
(d) Other Directors
/s/ David W. Biegler Director August 12, 1996
----------------------
DAVID W. BIEGLER
/s/ Barry J. Galt Director August 12, 1996
--------------------------
BARRY J. GALT
/s/ Clifford J. Grum Director August 12, 1996
--------------------------
CLIFFORD J. GRUM
/s/ Dean P. Guerin Director August 12, 1996
--------------------------
DEAN P. GUERIN
/s/ Jess T. Hay Director August 12, 1996
--------------------------
JESS T. HAY
/s/ Edmund M. Hoffman Director August 12, 1996
------------------------------
EDMUND M. HOFFMAN
/s/ Timothy R. Wallace Director August 12, 1996
--------------------------
TIMOTHY R. WALLACE
</TABLE>
II-7
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ ------- ------------
<S> <C> <C>
2(b) Note and Warrant Purchase Agreement, dated as of August 1, 1995, among
Transcisco, TRS, TLC and TTC and Furman Selz SBIC, L.P. and James
Dowling, which includes as Exhibit B-1 thereto the Form of Series A
Senior Subordinated Note, as Exhibit B-2 thereto the Form of Series B
Senior Subordinated Note, as Exhibit C thereto the Form of Warrant and
as Exhibit D thereto the Form of Registration Rights Agreement.
5 Opinion and Consent of Locke Purnell Rain Harrell (A Professional
Corporation) with respect to the legality of the securities being
registered hereby.
23(a) Consent of Locke Purnell Rain Harrell (A Professional Corporation)
(contained in its opinion included in Exhibit 5).
23(b) Consent of Ernst & Young LLP.
</TABLE>
<PAGE> 1
Exhibit 2(b)
=================================================================
NOTE AND WARRANT PURCHASE AGREEMENT
Among
TRANSCISCO INDUSTRIES, INC.,
TRANSCISCO RAIL SERVICES COMPANY,
TRANSCISCO LEASING COMPANY, and
TRANSCISCO TRADING COMPANY
and
FURMAN SELZ SBIC, L.P.
and
JAMES DOWLING
Dated as of August 1, 1995
=================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
I. THE NOTES AND THE WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Purchase and Sale of the Notes and the Warrants . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.01 Organization, Qualifications and Corporate Power . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.02 Authorization of Agreement, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.03 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.04 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.05 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.06 Events Subsequent to March 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.07 Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.08 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.09 Use of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.11 Loss Carryovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.13 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.14 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.15 Offering of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.16 Other Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.17 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.19 Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.20 Uni-Temp Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.21 SBIC Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.22 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.23 Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.25 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.26 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.27 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.28 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.29 Bank Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.30 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
IV. CONDITIONS TO THE OBLIGATION OF THE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.01 Conditions to the Obligation of the Purchasers
with Respect to the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.01 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.02 Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.03 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.04 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.06 LAW GOVERNING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.07 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.08 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 4
INDEX TO EXHIBITS
Description
EXHIBIT A Pro Rata Percentages
EXHIBIT B-1 Form of Series A Senior Subordinated Note
EXHIBIT B-2 Form of Series B Senior Subordinated Note
EXHIBIT C Form of Warrant
EXHIBIT D Form of Registration Rights Agreement
INDEX TO SCHEDULES
Description
2.01(b) Subsidiaries, Etc.
2.04(a) Warrants, Etc.
2.05 Pro Forma Capitalization
2.06 Events Subsequent to March 31, 1995
2.07 Litigation
2.08 Title to Properties
2.12 Environmental Matters
2.18 Employee Benefit Plans
2.28 Compensation Arrangements
<PAGE> 5
NOTE AND WARRANT PURCHASE AGREEMENT, dated as of August 1,
1995, among TRANSCISCO INDUSTRIES, INC., a Delaware corporation (the
"Company"), TRANSCISCO RAIL SERVICES COMPANY, a California corporation
("TRSC"), TRANSCISCO LEASING COMPANY, a Delaware corporation ("TLC") and
TRANSCISCO TRADING COMPANY, a Delaware corporation ("TTC") (each of TRSC, TLC
and TTC a "Subsidiary" and collectively, the "Subsidiaries") and FURMAN SELZ
SBIC, L.P., a Delaware limited partnership ("Furman Selz") and JAMES DOWLING
("Dowling") and collectively with Furman Selz, the "Purchasers").
WHEREAS the Company and the Subsidiaries wish to issue and
sell to each of the Purchasers on the Closing Date (as hereinafter defined)
their pro rata share (based on the percentages set forth on Exhibit A) ("Pro
Rata") of (i) an aggregate $2,000,000 principal amount of Series A Senior
Subordinated Notes Due 2000 of the Company and the Subsidiaries, substantially
in the form attached hereto as Exhibit B-1 (the "A Notes") and (ii) an
aggregate $1,000,000 principal amount of Series B Senior Subordinated Notes Due
2000 of the Company and the Subsidiaries, substantially in the form attached
hereto as Exhibit B-2 (the "B Notes", and together with the A Notes, the
"Notes"); and
WHEREAS the Company wishes to issue and sell to the Purchasers
on the Closing Date, Pro Rata, of a warrant or warrants to subscribe for up to
1,000,000 shares of Common Stock, par value $.01 per share, of the Company
("Common Stock"), substantially in the form attached hereto as Exhibit C (the
"Warrants"); and
WHEREAS the proceeds of the sale of the Notes and the Warrants
will be used, together with other funds of the Company and the Subsidiaries, to
repay certain obligations of the Company and the Subsidiaries; and
WHEREAS the Purchasers wish to purchase said Notes and
Warrants on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereby agree as follows:
I.
THE NOTES AND THE WARRANTS
SECTION 1.01 Purchase and Sale of the Notes and the
Warrants. (a) Subject to the terms and conditions set forth herein, on the
Closing Date (i) the Company and the Subsidiaries shall issue and sell to the
Purchasers, Pro Rata, and the Purchasers shall purchase from the Company and
the Subsidiaries, Pro Rata, the A Notes, registered in the names of Purchasers,
at a purchase price equal to 99% of the principal amount thereof; (ii) the
Company and the Subsidiaries shall issue and sell to the Purchasers, Pro Rata,
and the Purchasers shall purchase from the Company and the Subsidiaries, Pro
Rata, the B Notes, registered in the names of Purchasers, at a purchase price
equal to 99% of the principal amount thereof; and (iii) the Company shall issue
and sell to the Purchasers, Pro Rata, and the Purchasers shall purchase from
the Company, Pro Rata, the Warrants, having an exercise price (the "Warrant
Exercise Price") of $1.50 per share, registered in the names of Purchasers, at
an aggregate purchase price of $30,000; and (x) the Company and the
Subsidiaries shall issue and deliver to the Purchasers the Notes and (y) the
Company shall issue and deliver the Warrants. The Notes and the Warrants are
herein sometimes collectively referred to as the "Securities".
(b) As payment in full for the Securities being purchased
by it hereunder, and against delivery thereof as aforesaid, each Purchaser
shall deliver to the Company, on behalf of the Company, and to the Subsidiaries
on the Closing Date a certified or official bank check in New York Clearing
House funds, payable to the order of the Company, in the amount of their Pro
Rata share of $3,000,000 or shall transfer such sum to the account of the
Company by wire transfer.
<PAGE> 6
SECTION 1.02 Closing Date. The closing of the sale and
purchase of the Securities shall take place at the offices of Dechert Price &
Rhoads, 477 Madison Avenue, New York, New York 10022, at 10:00am, New York
time, concurrently with the execution hereof (such date and time of closing
being herein called the "Closing Date").
II.
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SUBSIDIARIES
The Company and the Subsidiaries, jointly and severally,
represent and warrant to, and agree with, the Purchasers as follows:
SECTION 2.01 Organization, Qualifications and Corporate
Power. (a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and is duly
licensed or qualified to do business as a foreign corporation, and is in good
standing in each other jurisdiction in which it owns or leases any real
property or in which the nature of business transacted by it makes such
licensing or qualification necessary and where the failure to be so licensed or
qualified would have a material adverse effect on the business, operations or
financial condition of the Company. The Company has the corporate power and
authority to own and hold its properties and to carry on its business as
currently conducted, to execute, deliver and perform this Agreement, the Notes,
the Warrants and the Registration Rights Agreement annexed hereto as Exhibit C
(the "Registration Rights Agreement") and to issue, sell and deliver the shares
of Common Stock issuable upon exercise of the Warrants (the "Warrant Shares").
(b) Except as set forth on Schedule 2.01(b) hereof, and
except for the capital stock of the Subsidiaries, the Company does not own of
record or beneficially, directly or indirectly, (i) any shares of outstanding
capital stock or securities convertible into capital stock of any other
corporation or (ii) any participating interest in any partnership, joint
venture or other non-corporate business enterprise. Except as set forth in
said Schedule 2.01(b), the Company owns, directly or indirectly, all the
outstanding capital stock of each Subsidiary (except for directors' qualifying
shares, if any), free and clear of all liens, charges, pledges, security
interests or other encumbrances. The capital stock of each Subsidiary is duly
authorized and validly issued and outstanding, fully paid and nonassessable.
No Subsidiary has issued or sold any shares of its capital stock or any
securities or obligations convertible into or exchangeable for, or given any
person any right to acquire from such Subsidiary, any shares of its capital
stock, and no such securities or obligations are outstanding. Each Subsidiary
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation listed in said Schedule 2.01(b)
and is duly licensed or qualified to do business as a foreign corporation and
is in good standing in each other jurisdiction in which it owns or leases any
real property or in which the nature of the business transacted by it makes
such licensing or qualification necessary and where the failure to be so
licensed or qualified would have a material adverse effect on the business,
operations or financial condition of such Subsidiary, and has the corporate
power and authority to own and hold its properties and to carry on its business
as currently conducted. Complete and correct copies of the Articles of
Incorporation and By-Laws of the Company and each Subsidiary as in effect on
the date hereof have been delivered to Purchasers. Other than the capital
stock of the subsidiaries set forth on Schedule 2.01(b), no Subsidiary owns of
record or beneficially, directly or indirectly, (i) any shares of outstanding
capital stock or securities convertible into capital stock of any other
corporation or (ii) any participating interest in any partnership, joint
venture or other non-corporate business enterprise.
SECTION 2.02 Authorization of Agreement, Etc. (a) The
execution, delivery and performance by the Company of this Agreement, the
Notes, the Warrants and the Registration Rights Agreement, and the performance
by the Company of its obligations hereunder and thereunder, and the issuance,
sale and delivery of the Warrant Shares upon exercise of the Warrants, have
been duly authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of
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<PAGE> 7
government, the Articles of Incorporation or By-laws of the Company, or any
provision of any indenture, agreement or other instrument by which the Company
or any of the Subsidiaries or any of their respective properties or assets is
bound or affected, or conflict with, result in a breach of, result in or permit
the termination of or acceleration of rights or obligations under, or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Company or any of the Subsidiaries.
(b) The Warrant Shares have been duly reserved for
issuance upon exercise of the Warrants and, when issued and paid for in
accordance with the terms of the Warrants, will be duly authorized, validly
issued and outstanding, fully paid and nonassessable shares of Common Stock.
Neither the issuance, sale and delivery of the Warrants nor the issuance, sale
and delivery of the Warrant Shares upon exercise thereof are subject to any
preemptive rights of stockholders of the Company or to any right of first
refusal or other similar right in favor of any person.
(c) The execution, delivery and performance by each of
the Subsidiaries of this Agreement and the Notes, and the performance by each
Subsidiary of its obligations hereunder and thereunder, have been duly
authorized by all requisite corporate action and will not violate any provision
of law, any order of any court or other agency of government, the Articles of
Incorporation or By-laws of any Subsidiary, or any provision of any indenture,
agreement or other instrument by which the Subsidiaries or any of their
respective properties or assets is bound or affected, or conflict with, result
in a breach of, result in or permit the termination of or acceleration of
rights or obligations under, or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of any of the
Subsidiaries.
SECTION 2.03 Validity. (a) This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms
(subject, as to enforcement of remedies to applicable bankruptcy,
reorganization, insolvency and similar laws, to moratorium laws from time to
time in effect and to general equity principals). The Notes, the Warrants and
the Registration Rights Agreement, when executed and delivered in accordance
with this Agreement, will constitute the legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms (subject,
as to enforcement of remedies to applicable bankruptcy, reorganization,
insolvency and similar laws, to moratorium laws from time to time in effect and
to general equity principles).
(b) This Agreement and the Notes have been duly executed
and delivered by the Subsidiaries and constitute the legal, valid and binding
obligation of each Subsidiary, enforceable in accordance with its terms
(subject, as to enforcement of remedies to applicable bankruptcy,
reorganization, insolvency and similar laws, to moratorium laws from time to
time in effect and to general equity principals).
SECTION 2.04 Capital Stock. The authorized capital stock of
the Company consists of (i) 1,000,000 shares of Preferred Stock, par value $.01
per share, of which no shares are issued and outstanding and (ii) 15,000,000
shares of Common Stock, par value $.01 per share, of which 5,466,268 shares
are validly issued and outstanding, fully paid and nonassessable. Of such
shares of Common Stock, 489,976 shares are being held in escrow ("Escrow
Shares") for the benefit of the Company's Class F Claimants (as such term is
defined in the Company's Articles of Incorporation as in effect on the date
hereof). Effective at the Closing hereunder, 304,822 shares of the Escrow
Shares will be returned to the Company and will be held as treasury shares.
Except as contemplated hereby and as set forth in Schedule 2.04(a) hereto, (i)
no subscription, warrant, option, convertible security or other right
(contingent or other) to purchase or acquire any shares of any class of capital
stock of the Company is authorized or outstanding; (ii) there is no commitment
of the Company to issue any shares, warrants, options or other such rights or
to distribute to holders of any class of its capital stock any evidences of
indebtedness or assets and (iii) the Company has no obligation (contingent or
other) to purchase, redeem or otherwise acquire any shares of its capital stock
or any interest therein or to pay any dividend or
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<PAGE> 8
make any other distribution in respect thereof. The execution, delivery and
performance by the Company of this Agreement, the Notes, the Warrants and the
Registration Rights Agreement, and the performance by the Company of its
obligations hereunder and thereunder will not cause the acceleration or vesting
of any of the options set forth in Schedule 2.04(a) or otherwise give rise to
any rights or obligations under any so-called "change-of-control" provisions.
SECTION 2.05 Financial Statements. The Company has furnished
to the Purchasers (i) the audited consolidated balance sheets of the Company
and the Subsidiaries as of March 31, 1995, December 31, 1993 and 1992 and the
related audited consolidated statements of operations, shareholders' equity
(net capital deficiency), and cash flows of the Company and the Subsidiaries
for the fiscal year ended March 31, 1995, the three-month period ended March
31, 1994, and for each of the two years in the period ended December 31, 1993,
certified by the principal financial officer of the Company and (ii) the
unaudited consolidated balance sheet of the Company and the Subsidiaries as of
June 30, 1995 and the related unaudited consolidated statements of operations,
shareholders' equity (net capital deficiency), and cash flows of the Company
and the Subsidiaries for the fiscal quarter then ended. Such financial
statements are complete and correct, have been prepared in accordance with
generally accepted accounting principles, consistently applied, and fairly
present the consolidated financial position of the Company and the Subsidiaries
as of such respective dates, and the consolidated results of their respective
operations and cash flows for the respective periods then ended. Immediately
after giving effect to the transactions contemplated hereby, the Company will
have the capitalization as set forth in Schedule 2.05.
SECTION 2.06 Events Subsequent to March 31, 1995. Since March
31, 1995, the businesses of the Company and the Subsidiaries have been operated
in the ordinary course and there has not been any material adverse change in
the assets, liabilities, income, business, operations or prospects of the
Company or the Subsidiaries. Since March 31, 1995, except as set forth in
Schedule 2.06 hereto or as contemplated hereby, neither the Company nor any of
the Subsidiaries has (i) issued any stock, bonds or other securities, (ii)
borrowed any amount or incurred any liabilities (absolute or contingent),
except current liabilities incurred, and liabilities under contracts entered
into, in the ordinary course of business, (iii) discharged or satisfied any
lien or incurred or paid any obligation or liability (absolute or contingent)
other than current liabilities shown on its balance sheet as of March 31, 1995
referred to in Section 2.05 hereof and current liabilities incurred since that
date in the ordinary course of business, (iv) declared or made any payment or
distribution to stockholders or purchased or redeemed any shares of its capital
stock or other securities or interests, (v) mortgaged, pledged or subjected to
lien any of its assets, tangible or intangible, other than liens of current
real property taxes not yet due and payable, (vi) sold, assigned or transferred
any of its tangible assets, except in the ordinary course of business, or
cancelled any debts or claims, (vii) sold, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets,
(viii) made any changes in officer compensation, or (ix) entered into any
transaction except in the ordinary course of business.
SECTION 2.07 Actions Pending. Except as set forth in Schedule
2.07 hereof, there are no (a) actions, suits, customer claims in excess of
$5,000, proceedings or investigations at law or in equity or by or before any
governmental instrumentality or other agency now pending or to the Company's or
any Subsidiaries' knowledge, threatened against or affecting the Company or the
Subsidiaries, or (b) judgments, decrees, injunctions or orders of any court,
governmental department, commission, agency, instrumentality or arbitrator
against or affecting the Company or the Subsidiaries.
SECTION 2.08 Title to Properties. The Company and each
Subsidiary have good and marketable title to all of their respective owned
properties and assets, free and clear of all mortgages, pledges, security
interests, liens, charges and other encumbrances, except for Permitted
Encumbrances (as defined below). As of the Closing and after giving effect to
the transactions contemplated hereby, the Company and each Subsidiary will have
good and marketable title to all their respective properties and assets free
and clear of mortgages, pledges, security interests, liens, charges and other
encumbrances, except under the Bank Debt (as defined in Section 4.01(d)) and
for Permitted Encumbrances. As of the Closing and after giving effect to the
transactions contemplated hereby, the Company and the Subsidiaries will enjoy
peaceful and undisturbed
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<PAGE> 9
possession under all leases relating to real property and all other leases
(other than immaterial leases which can be replaced on substantially the same
terms) necessary for the operation of their properties and business; and all
such leases are valid and subsisting and in full force and effect. As used
herein, "Permitted Encumbrances" means any mortgages, pledges, security
interests, liens, charges and other encumbrances (i) as described in Schedule
2.08 hereto, (ii) liens for current taxes, assessments and other governmental
charges not overdue, (iii) mechanic's, materialmen's and similar liens which
may have arisen in the ordinary course of business and which, in the aggregate,
would not be material to the financial condition of the Company or such
Subsidiary, (iv) security interests securing indebtedness not in default for
the purchase price of or lease rental payments on property purchased or leased
under capital lease arrangements in the ordinary course of business, and (v)
minor imperfections of title, if any, not material in amount and not materially
detracting from the value or impairing the use of the property subject thereto
or impairing the operations or proposed operations of the Company and its
Subsidiaries, taken as a whole.
SECTION 2.09 Use of Real Property. Neither the Company nor
any Subsidiary has received notice of violation of any applicable zoning or
building regulation, ordinance or other law, order, regulation or requirement
relating to the operations of the Company or any Subsidiary and there is no
such violation. All plants and other buildings that are located on the real
properties reflected in the balance sheet as of March 31, 1995 referred to in
Section 2.05 hereof comply in all material respects with all applicable
ordinances, codes, regulations and requirements, and no law or regulation
presently in effect or condition precludes or materially restricts continuation
of the present use of such properties.
SECTION 2.10 Taxes. The Company and each Subsidiary has filed
or caused to be filed all Federal, state, local and foreign tax returns that
are required to be filed and has paid or caused to be paid all taxes shown as
due on all such returns or on any assessment received by it.
SECTION 2.11 Loss Carryovers. The federal income tax net
operating loss carryovers of the Company as reported on the consolidated
federal income tax returns of the Company for the taxable year ended March 31,
1995 are $30,000,000 for regular minimum tax purposes and $29,000,000 for
alternative minimum tax purposes (the "Loss Carryovers"). The application of
such Loss Carryovers and any additional net operating losses of the Company for
the period beginning April 1, 1995 and ending on the Closing Date are not
subject to limitation under Section 382 of the Internal Revenue Code of 1986,
as amended (the "Code"). The losses and credits of the Company, including the
Loss Carryovers, will not be subject to limitation under either Section 382 or
383 of the Code as a result of the change in ownership of the Company upon
consummation of the transactions contemplated by this Agreement or the issuance
of the Warrant Shares upon exercise of the Warrants. For purposes of the
immediately preceding sentence, the calculation of any change in ownership of
the Company shall take into account any possible changes in ownership of stock
of the Company as a result of (i) transfers of stock by that certain group
consisting of Mark Hungerford, Katy Hungerford, Southern Cross Trust and Ozura
Corporation who together filed a Form 13D with the Securities and Exchange
Commission pursuant to the Securities and Exchange Act of 1934, as amended, or
(ii) the exercise of any options or rights to purchase stock of the Company
currently outstanding or to be issued or granted pursuant to the transactions
contemplated hereby, including but not limited to those options and stock
purchase rights set forth on Schedule 2.04(a).
SECTION 2.12 Environmental Matters. The Company and the
Subsidiaries have complied with each and are not in violation of any, federal,
state or local law, regulation, permit, provision or ordinance relating to the
generation, storage, transportation, treatment or disposal of hazardous, toxic
or polluting substances, except where such noncompliance or violation would not
result in any material adverse effect on the business, operations or financial
condition of the Company and the Subsidiaries, taken as a whole, or their
properties or assets, taken as a whole. The Company and the Subsidiaries have
obtained and adhered to all necessary permits and other approvals necessary to
store, dispose, and otherwise handle hazardous, toxic and polluting substances,
the failure of which to obtain or adhere to would result in any material
adverse effect on the business, operations or financial condition of the
Company and the Subsidiaries, taken as a whole, or their properties or assets,
taken as a whole. The Company and the Subsidiaries have reported, to the
extent required
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<PAGE> 10
by federal, state and local law, all past and present sites where hazardous,
toxic or polluting substances, if any, from the Company and the Subsidiaries
have been treated, stored or disposed. Neither the Company nor any Subsidiary
has transported any hazardous, toxic or polluting substances or arranged for
the transportation of such substances to any location which is the subject of
federal, state or local enforcement actions or other investigations which may
lead to claims against the Company or the Subsidiaries for clean-up costs,
remedial work, damages to natural resources or for personal injury claims,
including, but not limited to, claims under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended which claims would
result in a material adverse effect on the business, operations or financial
condition of the Company and the Subsidiaries, taken as a whole, or their
properties or assets, taken as a whole.
SECTION 2.13 Governmental Approvals. No registration or
filing with, or consent or approval of, or other action by, any Federal, state
or other governmental agency or instrumentality is or will be necessary for the
valid execution, delivery and performance of this Agreement, the Notes, the
Warrants and the execution and delivery of the Registration Rights Agreement,
or the issuance, sale and delivery of the Warrant Shares.
SECTION 2.14 Use of Proceeds. The Company and the
Subsidiaries will apply the proceeds of the issuance and sale of the
Securities, together with other funds, to finance (i) the repurchase in full of
all debt owed to the Class F Claimants at an aggregate repurchase price of less
than $9 million, and (ii) the repayment in full of all debt owed to Congress
Financial Corporation (Western) by TRSC pursuant to a secured line of credit
(the "Congress Debt"). After giving effect to the transactions contemplated
hereby, the Company shall have discharged all its obligations to the Class F
Claimants.
SECTION 2.15 Offering of the Securities. Neither the Company,
the Subsidiaries nor any person authorized or employed by the Company or the
Subsidiaries as agent, broker, dealer or otherwise in connection with the
offering or sale of the Securities or any similar security of the Company or
the Subsidiaries has offered the Securities or any such security for sale to,
or solicited any offers to buy the Securities or any similar security of the
Company or the Subsidiaries from, or otherwise approached or negotiated with
respect thereto with, any person or persons other than the Purchasers, and
neither the Company, the Subsidiaries nor any person acting on their behalf has
taken or will take any action (including, without limitation, any offer,
issuance or sale of any security of the Company or the Subsidiaries under
circumstances which might require the integration of such offer, issuance or
sale with the offer, issuance and sale of the Securities under the Securities
Act of 1933, as amended (the "Securities Act") or the rules and regulations of
the Securities and Exchange Commission (the "Commission") thereunder) which
might subject the offering, issuance or sale of the Securities to the
registration provisions of the Securities Act.
SECTION 2.16 Other Contracts and Commitments. Neither the
Company nor any of the Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party that may result
in any material adverse change in the business, operations or financial
condition of the Company and the Subsidiaries, taken as a whole.
SECTION 2.17 Compliance with Law. Neither the Company nor any
of the Subsidiaries is in default under any order of any court, governmental
authority or arbitration board or tribunal to which the Company or such
Subsidiary is or was subject or in violation of any laws, ordinances,
governmental rules or regulations (including, but not limited to, those
relating to environmental, safety, building, product safety or health standards
or employment matters) to which the Company or such Subsidiary is or was
subject, in each case, that would result in any material adverse effect on the
business, operations or financial condition of the Company and the
Subsidiaries, taken as a whole, or their properties or assets, taken as a
whole. The businesses of the Company and the Subsidiaries are being conducted
in compliance with all applicable laws, ordinances, rules and regulations
applicable to them, the non-compliance with which would have a material adverse
effect on the business, operations or financial condition of the Company and
the Subsidiaries, taken as a whole, or their properties or assets, taken as a
whole. Neither the Company nor any of the Subsidiaries has failed to
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<PAGE> 11
obtain any licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of the business
of the Company or such Subsidiary, which failure would have a material adverse
effect on the business, operations or financial condition of the Company and
the Subsidiaries, taken as a whole, or their properties or assets, taken as a
whole.
SECTION 2.18 Employee Benefit Plans. (a) The Company (which
term shall include, for purposes of this Section 2.18, each of the
Subsidiaries) has complied and currently is in compliance, both as to form and
operation, with the applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Internal Revenue Codes of
1954 and/or 1986, as amended, respectively (the "Code"), with respect to each
"employee benefit plan" as defined under Section 3(3) of ERISA ("Plan") which
the Company (i) has ever adopted, maintained, established or to which the
Company has ever been required to contribute or to which the Company has ever
contributed or (ii) currently maintains or to which the Company currently
contributes or is required to contribute or (iii) currently participates in or
is required to participate in.
(b) The Company has never maintained, adopted or
established, contributed or been required to contribute to, or otherwise
participated in or been required to participate in, a "multiemployer plan" (as
defined in Section 3(37) of ERISA). No amount is due or owing from the Company
on account of a "multi-employer plan" (as defined in Section 3(37) of ERISA) or
on account of any withdrawal therefrom.
(c) Notwithstanding anything else set forth herein, the
Company has not incurred any liability with respect to a Plan, including,
without limitation, under ERISA (including, without limitation, Title I or
Title IV of ERISA and other than liability for premiums due to the Pension
Benefit Guaranty Corporation), the Code or other applicable law, which has not
been satisfied in full, and no event has occurred, and there exists no
condition or set of circumstances which could result in the imposition of any
liability with respect to a Plan, including, without limitation, under ERISA
(including, without limitation, Title I or Title IV of ERISA), the Code or
other applicable law with respect to the Plan.
(d) Except as set forth on Schedule 2.18, the Company has
not committed itself, orally or in writing, to (i) provide or cause to be
provided to any person any payments or benefits in addition to, or in lieu of,
those payments or benefits set forth under any Plan, or (ii) continue the
payment of, or accelerate the payment of, benefits under any Plan, except as
expressly set forth thereunder. Complete and correct copies of all written
arrangements described in the preceding sentence as in effect on the date
hereof have been delivered to Purchasers.
(e) Except as set forth on Schedule 2.18, the Company has
not committed itself, orally or in writing, to provide or cause to be provided
any severance or other post-employment benefit, salary continuation,
termination, disability, death, retirement, health or medical benefit, or
similar benefit to any person (including, without limitation, any former or
current employee) except as set forth under any Plan. Complete and correct
copies of all written arrangements described in the preceding sentence as in
effect on the date hereof have been delivered to Purchasers.
SECTION 2.19 Intellectual Property Rights. The Company
and the Subsidiaries own or possess all patents, trademarks, services marks,
trade names, copyrights, licenses, authorizations and other intangible
property, and all rights with respect to the foregoing, necessary for the
conduct of their respective businesses as now conducted, without any known
material conflict with the rights others. The consummation of the transactions
contemplated hereby will not alter or impair in any material respect any of
such rights of the Company or the Subsidiaries, including without limitation,
the rights of the Company and the Subsidiaries under licensing and
sub-licensing agreements of the Uni-Temp heating technology (the "Uni-Temp
Licenses").
SECTION 2.20 Uni-Temp Licenses. The Uni-Temp Licenses are in
full force and effect. Neither the Company nor any of the Subsidiaries is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in the Uni-Temp Licenses, and to
the knowledge of the Company and the Subsidiaries, no other party to the
Uni-Temp Licenses is in default in the performance,
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<PAGE> 12
observance or fulfillment of any of the obligations, covenants or conditions
contained therein. The execution, delivery and performance by the Company or
any of the Subsidiaries of this Agreement and the performance by the Company or
any Subsidiary of its obligations hereunder will not violate any provision of
the Uni-Temp Licenses, or conflict with, result in a breach of, result in or
permit the termination or acceleration of rights or obligations under, or
constitute (with due notice or lapse of time or both) a default under, the
Uni-Temp Licenses.
SECTION 2.21 SBIC Representations. (a) Neither the
Company nor any Subsidiary does in any manner or form discriminate, foster
discrimination or permit discrimination against any person belonging to any
minority race or believing in any minority creed or religion.
(b) The Company, together with its Subsidiaries and
affiliates, (i) is not dominant in its field of operation and (ii) does not
have net worth in excess of $18 million and did not have average net income
after Federal income taxes (excluding any carryover losses) for the preceding
two completed fiscal years in excess of $6 million, for purposes of the Small
Business Investment Act of 1958, as amended (the "SBIA") and the regulations of
the Small Business Administration ("SBA") promulgated thereunder.
(c) To the Company's knowledge, none of its stockholders
is a small business investment corporation.
SECTION 2.22 SEC Filings. Since January 1, 1993, the Company
has timely filed all required reports, statements, schedules and registration
statements with the Commission required to be filed by the Company pursuant to
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), all
of which complied in all material respects with all applicable requirements of
the Exchange Act. The Company has delivered to Purchasers (i) its annual
reports on Form 10-K for its fiscal years ended December 31, 1993 and March 31,
1995, (ii) its quarterly report on Form 10-Q for its fiscal quarter ended
December 31, 1994 and (iii) its proxy or information statements relating to
meetings of, or action taken without a meeting by, the stockholders of the
Company held since January 1, 1993 (the items described in clauses (i), (ii)
and (iii) are collectively referred to as "SEC Filings"). The Company has not
made any SEC Filing since the filing of its annual report on Form 10-K for its
fiscal year ending March 31, 1995. As of their respective dates, none of the
SEC Filings, including without limitation, any financial statements or
schedules included therein, at the time filed, contained any untrue statements
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since March 31,
1995, neither the Company nor any Subsidiary has entered into any transaction
that would be required to be disclosed in any SEC Filing pursuant to Item 404
of Regulation S-K promulgated by the Commission pursuant to the Securities Act
if such SEC Filing was made as of the date hereof.
SECTION 2.23 Burdensome Restrictions. Neither the Company nor
any Subsidiary is obligated under any contract or agreement or subject to any
charter or other corporate restriction which materially adversely affects the
Company's or any Subsidiary's business, properties, assets, prospects or
condition (financial or otherwise).
SECTION 2.24 Insurance. All policies of liability, theft,
fidelity, business interruption, life, fire, product liability, workmen's
compensation, health and other forms of insurance held by the Company and its
Subsidiaries are valid and enforceable policies and are outstanding and duly in
force and all premiums with respect thereto are paid to date. The amounts of
coverage under such policies of insurance for the assets and properties of the
Company and its Subsidiaries are adequate against risks usually insured against
by persons operating similar businesses and operating similar properties.
SECTION 2.25 Brokers. Neither the Company nor the
Subsidiaries nor any of their respective officers, directors, employees or
stockholders has employed any broker or finder in connection with the
transactions contemplated by this Agreement.
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SECTION 2.26 Registration Rights. Except as contemplated by
the Registration Rights Agreement, no person has any right to cause the Company
or any Subsidiary to effect the registration under the Securities Act of any
shares of Common Stock or any other securities (including debt securities) of
the Company or any Subsidiary.
SECTION 2.27 Investment Company Act. The Company is not an
"investment company" as that term is defined in, and is not otherwise subject
to regulation under, the Investment Company Act of 1940, as amended.
SECTION 2.28 Compensation Arrangements. Except as set forth
in Schedule 2.28 hereto, (i) neither the Company nor any of the Subsidiaries is
a party to any employment or deferred compensation agreements that require
payments by the Company or any Subsidiary to any individual in excess of
$100,000, or in the aggregate, in excess of $500,000, in each case, in any year
(ii) neither the Company nor any of the Subsidiaries has any bonus, incentive
or profit-sharing plans that would require payments by the Company and its
Subsidiaries to any individual in an amount equal to or exceeding $50,000 in
any one year, and (iii) there are no existing material arrangements or proposed
material transactions between the Company or any of the Subsidiaries and any
officer or director or holder of more than 5% of the capital stock of the
Company or any of the Subsidiaries. Complete and correct copies of all written
arrangements described in the preceding sentence as in effect on the date
hereof have been delivered to Purchasers and shall be amended to the
satisfaction of Purchasers prior to the Closing.
SECTION 2.29 Bank Debt. The representations and warranties
made by the Company and the Subsidiaries in the Credit Agreement by and among
Transamerica Business Credit Corporation (the "Bank"), the Company and the
Subsidiaries dated as of July 31, 1995 (the "Credit Agreement") are true and
correct.
SECTION 2.30 Disclosure. Neither this Agreement nor any other
document, certificate, instrument or statement furnished or made to the
Purchasers by or on behalf of the Company or any Subsidiary in connection with
the transactions contemplated hereby contain any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact known
to the Company or any Subsidiary which materially adversely affects the
business, operations, affairs, prospects, condition, properties or assets of
the Company and the Subsidiaries which has not been set forth in this Agreement
or in the other documents, certificates, instruments or written statements
furnished to the Purchasers by or on behalf of the Company and the
Subsidiaries.
III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers, Pro Rata, represent and warrant to the
Company and the Subsidiaries that each of them is acquiring the Securities and
will acquire the Warrant Shares for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof. Each Purchaser further represents that it understands
that (i) the Securities have not been, and the Warrant Shares, when issued,
sold and delivered upon exercise of the Warrants, will not be, registered under
the Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereof, (ii) the Securities and the Warrant Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration and (iii) the Securities and the Warrant
Shares will bear a legend to such effect. Each Purchaser further understands
that the exemption from registration afforded by Rule 144 under the Securities
Act depends on the satisfaction of various conditions and that, if applicable,
Rule 144 affords the basis of sales of the Securities and the Warrant Shares
only in limited amounts under certain conditions. Each Purchaser further
represents and covenants that it is an "accredited investor", within the
meaning of Rule 501(a) of the Securities Act.
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IV.
CONDITIONS TO THE OBLIGATION OF THE PURCHASERS
SECTION 4.01 Conditions to the Obligation of the Purchasers
with Respect to the Closing. The obligation of each Purchaser to purchase and
pay for the Securities being purchased by it on the Closing Date is, at its
option, subject to the satisfaction, on or before such date, of the following
conditions:
(a) Opinion of Counsel. The Purchasers shall have
received from Skadden, Arps, Slate, Meagher & Flom and Greene, Radovsky,
Maloney & Share, counsel for the Company, opinion dated the Closing Date, in
form and substance satisfactory to the Purchasers and their counsel, to the
effect that:
(i) The Company is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Company has the corporate
power and authority to own and hold its properties and to
carry on its business as currently conducted, to execute,
deliver and perform this Agreement, the Notes, the Warrants
and the Registration Rights Agreement and to issue, sell and
deliver the Warrant Shares.
(ii) Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the
laws of the State of its jurisdiction of incorporation; except
as set forth on Schedule 2.01(b) to this Agreement, the
Company owns, directly or indirectly, all the outstanding
capital stock of each Subsidiary (except for directors'
qualifying shares, if any), free and clear of all liens,
charges, pledges, security interests or other encumbrances;
and the capital stock of each Subsidiary is duly authorized
and validly issued and outstanding, fully paid and
nonassessable.
(iii) The authorized capital stock of the Company
consists of (i) 1,000,000 shares of Preferred Stock, par value
$.01 per share, of which no shares are issued and outstanding
and (ii) 15,000,000 shares of Common Stock, par value $.01 per
share, of which 5,466,268 shares are validly issued and
outstanding, fully paid and nonassessable. Of such shares,
489,976 shares are Escrow Shares held for the benefit of the
Company's Class F Claimants.
(iv) The execution, delivery and performance by
the Company of this Agreement, the Notes, the Warrants and the
Registration Rights Agreement have been duly authorized by all
requisite corporate action, and each has been duly executed
and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable in
accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency
and similar laws, to moratorium laws from time to time in
effect and to general equity principles), except that such
counsel need express no opinion as to the indemnification
provisions of the Registration Rights Agreement.
(v) The execution, delivery and performance by
the Subsidiaries of this Agreement and the Notes have been
duly authorized by all requisite corporate action, and each
has been duly executed and delivered by the Subsidiaries and
constitutes the legal, valid and binding obligation of the
Subsidiaries, enforceable in accordance with its terms
(subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency and similar laws, to
moratorium laws from time to time in effect and to general
equity principles).
(vi) The execution, delivery and performance by
the Company of this Agreement, the Notes, the Warrants and the
Registration Rights Agreement and the issuance, sale and
delivery of the Warrant Shares will not violate any provision
of law, any order of any court or other agency of government,
the Articles of Incorporation or By-laws of the Company, or,
to the best knowledge of such counsel, after due inquiry, any
provision of any indenture,
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<PAGE> 15
agreement or other instrument by which the Company or any of
the Subsidiaries or any of their respective properties or
assets is bound or affected, or conflict with, result in a
breach of, result in or permit the termination of or
acceleration of rights or obligations under, or constitute
(with due notice or lapse of time or both) a default, or
result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the
properties or assets of the Company or any of the
Subsidiaries, under any such indenture, agreement or other
instrument.
(vii) The execution, delivery and performance by
the Subsidiaries of this Agreement and the Notes will not
violate any provision of law, any order of any court or other
agency of government, the Articles of Incorporation or By-laws
of the Subsidiaries, or, to the best knowledge of such
counsel, after due inquiry, any provision of any indenture,
agreement or other instrument by which the Subsidiaries or any
of their respective properties or assets is bound or affected,
or conflict with, result in a breach of, result in or permit
the termination of or acceleration of rights or obligations
under, or constitute (with due notice or lapse of time or
both) a default, or result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of the Subsidiaries, under any
such indenture, agreement or other instrument.
(viii) The issuance, sale and delivery of the
Warrant Shares upon exercise of the Warrants have been duly
authorized by all requisite corporate action, and the Warrant
Shares have been duly reserved for issuance upon exercise of
the Warrants and, when issued and paid for in accordance with
the provisions of the Warrants, will be duly authorized,
validly issued and outstanding, fully paid and nonassessable
shares of Common Stock. Neither the issuance, sale and
delivery of the Warrants nor the issuance, sale and delivery
of the Warrant Shares upon exercise thereof are subject to any
preemptive rights of stockholders of the Company or, to the
best knowledge of such counsel, after due inquiry, to any
right of first refusal or other similar right in favor of any
person.
(ix) The issuance, sale and delivery of the
Securities to each Purchaser on the Closing Date, under the
circumstances contemplated by this Agreement, are exempt from
the registration requirements of the Securities Act, and the
issuance, sale and delivery of the Warrant Shares upon
exercise of the Warrants will be exempt from such
requirements, provided, in each case, that such Purchaser is
an "accredited investor" within the meaning of Rule 501(a) of
the Securities Act.
(b) Representations and Warranties to Be True and
Correct. The representations and warranties contained in Article II hereof
shall be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such
date, and the President of the Company shall have certified to such effect to
the Purchasers in writing.
(c) Performance. The Company and the Subsidiaries shall
have performed and complied with all agreements and conditions contained herein
required to be performed or complied with by it prior to or at the Closing
Date, and the President of the Company shall have certified to such effect to
the Purchasers in writing.
(d) Bank Debt; Use of Proceeds. The Company, the
Subsidiaries and the Bank shall have executed and delivered the Credit
Agreement. The Credit Agreement and all documentation relating thereto shall
have been delivered to Purchasers not later than five (5) business days prior
to the Closing Date and shall be in form and substance satisfactory to
Purchasers. Concurrent herewith, the Company and the Subsidiaries shall have
borrowed $5,500,000 under the Credit Agreement, which funds, together with the
purchase price for the Securities purchased hereunder, shall be used to repay
all of the Company's obligations to the Class F Claimants and the Subsidiaries'
obligations under the Congress Debt.
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<PAGE> 16
(e) Class F Claimants. Concurrently herewith, the
Company shall have discharged all its obligations to the Class F Claimants, and
304,822 shares of the Escrow Shares shall be been released from escrow and
returned to the Company as treasury shares.
(f) All Proceedings to Be Satisfactory. All corporate
and other proceedings to be taken by the Company and the Subsidiaries in
connection with the transactions contemplated hereby and all documents incident
thereto shall be satisfactory in form and substance to the Purchasers and their
counsel, Dechert Price & Rhoads, and the Purchasers and said counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(g) Registration Rights Agreement. The Company shall
have executed and delivered the Registration Rights Agreement.
(h) Supporting Documents. On or prior to the Closing
Date, the Purchasers and their counsel shall have received copies of the
following supporting documents:
(i) (A) copies of the Articles of Incorporation
of the Company and each Subsidiary, and all amendments
thereto, certified as of a recent date by the Secretaries of
State of the States of their respective jurisdictions and (B)
a certificate of each said Secretaries dated as of a recent
date as to the due incorporation and good standing of the
Company and the Subsidiaries and listing all documents of the
Company and the Subsidiaries on file with said Secretaries;
(ii) a certificate of the Secretary or an
Assistant Secretary of the Company and each Subsidiary dated
the Closing Date and certifying (A) that attached thereto is a
true and complete copy of the By-laws of the Company or the
Subsidiary, as the case may be, as in effect on the date of
such certification; (B) that attached thereto is a true and
complete copy of resolutions adopted by the Board of Directors
of the Company or the Subsidiary, as the case may be,
authorizing the execution, delivery and performance of this
Agreement, the Notes, the Warrants and the Registration Rights
Agreement, the issuance, sale and delivery of the Securities
and the reservation, issuance and delivery of the Warrant
Shares, as the case may be, and that all such resolutions are
still in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated by
this Agreement, the Notes, the Warrants and the Registration
Rights Agreement, as the case may be; (C) that the Articles of
Incorporation of the Company or the Subsidiary, as the case
may be, have not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to
clause (i)(B) above; and (D) as to the incumbency and specimen
signature of each officer of the Company or the Subsidiary, as
the case may be, executing this Agreement, the Securities and
the Registration Rights Agreement, and any certificate or
instrument furnished pursuant hereto, as the case may be, and
a certification by another officer of the Company or
Subsidiary, as the case may be, as to the incumbency and
signature of the officer signing the certificate referred to
in this paragraph (ii); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of the
Company and the Subsidiaries as the Purchasers or their
counsel may reasonably request.
All such documents shall be satisfactory in form and substance to the
Purchasers and their counsel.
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V.
COVENANTS
The Company, the Subsidiaries and the Purchasers covenant and agree as
follows:
(a) Financial Statements, Reports, Etc. So long as the
Purchasers shall hold of record any Securities or any Warrant Shares issued or
issuable pursuant to the Warrants, in each case acquired by it pursuant to this
Agreement, the Company shall furnish to each Purchaser, or, in the event the
Company is not subject to the reporting requirements of the Securities Exchange
Act of 1934 and any subsequent holder of Securities shall hold 25% or more in
principal amount of the Securities or 25% or more of the Warrant Shares issued
or issuable pursuant to the Warrants, the Company shall furnish to each such
subsequent holder:
(i) within 90 days after the end of each fiscal
year of the Company, a consolidated balance sheet of the
Company and its subsidiaries, as of the end of such fiscal
year, and the related consolidated statements of income,
changes in stockholders' equity and cash flows of the Company
and its subsidiaries for the fiscal year then ended, together
with supporting notes thereto, certified without qualification
as to scope of audit by a firm of independent public
accountants of recognized national standing selected by the
Company and reasonably acceptable to the Purchasers;
(ii) within 45 days after the end of each fiscal
quarter in each fiscal year (other than the last fiscal
quarter in each fiscal year), a consolidated balance sheet of
the Company and its subsidiaries and the related consolidated
statements of income and cash flows of the Company and its
subsidiaries, unaudited but certified by the principal
financial officer of the Company, such balance sheet to be as
of the end of such fiscal quarter and such statements of
income and cash flows to be for such fiscal quarter, for the
corresponding fiscal quarter of the immediately preceding
fiscal year, for the period from the beginning of the fiscal
year to the end of such fiscal quarter and for the period from
the beginning of the immediately preceding year to the end of
the corresponding fiscal quarter in such fiscal year, in each
case subject to normal year-end adjustments;
(iii) within 30 days after the end of each month in
each fiscal year (other than the last month in each fiscal
year), a consolidated balance sheet of the Company and its
subsidiaries and the related consolidated statement of income,
unaudited but certified by the principal financial officer of
the Company, such balance sheets to be as of the end of such
month and such statements of income to be for such month and
for the period from the beginning of the fiscal year to the
end of such month, in each case subject to normal year-end
adjustments;
(iv) within 30 days following the beginning of
each fiscal year of the Company (and with respect to any
revision thereof, promptly after such revision has been
prepared), a proposed operating budget for the Company and the
Subsidiaries, including anticipated monthly income statements
and cash flow statements during such fiscal year and a
projected balance sheet as of the end of such fiscal year,
setting forth in each case the assumptions (which assumptions
and projections shall represent and be based upon the good
faith judgment in respect thereof of the chief executive
officer of the Company) behind the projections contained in
such financial statements, and each monthly statement of
income furnished pursuant to (iii) above shall reflect
variances from such operating budget, as the same may from
time to time be revised;
(v) promptly upon filing, copies of all
registration statements, prospectuses, periodic reports and
other documents filed by the Company with the Commission;
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<PAGE> 18
(vi) promptly, from time to time, such other
information regarding the operations, business, affairs and
financial condition of the Company or any subsidiary as the
Purchasers or such other holders may reasonably request (the
term "subsidiary" as used herein being defined to mean any
corporation or other business entity a majority of whose
outstanding voting stock entitled to vote for the election of
directors is at the time owned by the Company and/or one or
more other subsidiaries); and
(vii) within 45 days after the end of each fiscal
quarter in each fiscal year, a certificate signed by the Chief
Executive Officer of the Company and each Subsidiary
certifying that the Company and the Subsidiaries are in
compliance with all covenants contained herein and in the
Notes.
(b) Small Business Administration Forms. The Company
shall execute Forms 480 ("Size Status Declaration") and 652-D ("Assurance of
Compliance") of the SBA and any other documents that may be required by the SBA
or any other governmental agency having jurisdiction over the activities of the
Purchasers, or which Purchasers may reasonably require in connection therewith.
(c) Use of Proceeds. The Company and the Subsidiaries
shall use the proceeds received from the sale of the Securities pursuant to
this Agreement as set forth in Section 2.14. The Company and the Subsidiaries
shall give Purchasers, their agents and representatives, reasonable access
during normal business hours to the books, records, facilities, personnel and
accountants of the Company and the Subsidiaries so that Purchasers may review
the Company's compliance with the provisions of this section.
(d) Board of Directors. So long as Furman Selz owns of
record either (i) 25% in aggregate principal amount of the A Notes issued to
Furman Selz pursuant to this Agreement; (ii) 25% in aggregate principal amount
of the B Notes issued pursuant to this Agreement; or (iii) 25% of the Warrants
issued pursuant to this Agreement (for purposes of this clause (iii) record
ownership of Warrant Shares issued to Furman Selz pursuant to exercise of the
Warrants shall be considered continued ownership of the Warrants) (the amounts
in clauses (i), (ii) and (iii) above are hereinafter referred to as a
"Qualifying Amount"); then Furman Selz shall have the right to designate one
director (the "Designee") to the Company's board of directors (the "Board").
The Company and the Board shall use its best efforts, at any time and from time
to time so long as Furman Selz owns of record a Qualifying Amount of Securities
or Warrant Shares, to cause such Designee to be elected to the Board. The best
efforts of the Board shall include, but not be limited to, (i) increasing by
one the number of directors on the Board, (ii) the appointment at Closing of
such Designee to the Board as a Class I Director in accordance with Section 223
of the Delaware General Corporate Law, (ii) the inclusion of the Designee on
any proxy statement or other materials prepared and delivered to the Company's
stockholders with respect to any election of Class I Directors, such inclusion
to comply with any applicable legal requirements and (iii) the recommendation
to the Company's stockholders that the Designee be elected as a director of the
Board.
(e) Put Right for Warrants. If for ten of the twelve
months immediately preceding July 31, 2000, the Common Stock does not have a
daily average trading volume of at least 8,000 shares, as reported each day in
The Wall Street Journal (or other national business publication) and any
Warrants remain outstanding, then the holders of the Warrants shall have the
option (the "Put Right") commencing on August 1, 2000 and expiring on September
30, 2000 (the "Put Period") to sell to the Company, and the Company shall have
the obligation to purchase any or all outstanding Warrants at a price equal to
the fair market value of the Warrants (as such term is defined in Section 1(b)
of the Warrants). To exercise its Put Right, such holder shall notify the
Company in writing during the Put Period of its intention to exercise such Put
Right. Within ten days following delivery of such Notice, a closing shall take
place whereby such holder shall surrender the Warrants, and the Company shall
pay to the holder in cash the fair market value of the Warrants pursuant to
which the Put Right is exercised and shall issue to such holder replacement
Warrants for the balance, if any, of Warrants to which such holder has not
exercised the Put Right. This Put Right shall be subordinated to the Senior
Debt of the Company (as such term is defined in the Notes) on the same terms as
the Notes.
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<PAGE> 19
(f) Upon notice given as provided in the Notes, the
Company may, at its option, prepay the outstanding principal amount of Notes in
whole or in part, in multiples of $100,000, from time to time, at the principal
amount thereof so to be prepaid, together with interest accrued thereon to the
date fixed for such prepayment; provided, however, that any such prepayment
shall first be applied against the principal amount outstanding and interest
accrued thereon of the A Notes, and the balance, if any, shall be applied
against the principal amount outstanding and interest accrued thereon of the B
Notes.
VI.
MISCELLANEOUS
SECTION 6.01 Expenses. The Company and the Subsidiaries will
pay their own expenses in connection with the transactions contemplated hereby,
whether or not such transactions shall be consummated, and the Company shall
pay the out-of-pocket fees, costs and expenses of Furman Selz and its counsel
and accountants in connection with this Agreement, the Notes, the Warrants, the
Registration Rights Agreement and the transactions contemplated hereby and
thereby.
SECTION 6.02 Survival of Agreements. All covenants,
agreements, representations and warranties made herein to each Purchaser shall
survive the execution and delivery of this Agreement and the issuance, sale and
delivery of the Securities pursuant hereto until the earlier to occur of (i)
the expiration date of the Warrants and (ii) the date on which no Securities or
Warrant Shares are issued and outstanding and owned of record by such
Purchaser, and all statements contained in any certificate or other instrument
delivered by the Company and any Subsidiary hereunder shall be deemed to
constitute representations and warranties made by the Company and such
Subsidiary.
SECTION 6.03 Brokerage. Each party hereto will indemnify and
hold harmless the others against and in respect of any claim for brokerage or
other commissions relative to this Agreement or to the transactions
contemplated hereby, based in any way on agreements, arrangements or
understandings made or claimed to have been made by such party with any third
party.
SECTION 6.04 Parties in Interest. All covenants and
agreements contained in this Agreement by or on behalf of either party hereto
shall bind and inure to the benefit of the respective successors and assigns of
such party hereto, whether so expressed or not.
SECTION 6.05 Notices. All notices, requests, consents and
other communications hereunder shall be in writing and shall be mailed by
first-class registered mail, postage prepaid, or sent by recognized courier
service addressed as follows:
(a) if to the Company or any Subsidiary, at
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
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<PAGE> 20
(b) if to Furman Selz at:
230 Park Avenue
New York, NY 10169
Attention: Brian P. Friedman
if to Dowling at:
620 Fir Court
Norwood, NJ 07648
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Carmen J. Romano, Esq.
(c) if to any subsequent holder of Securities or Warrant
Shares, to such holder at its address appearing on the records of the
Company;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 6.06 LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.07 Entire Agreement. This Agreement constitutes the
entire Agreement of the parties with respect to the subject mater hereof and
may not be modified or amended except in writing.
SECTION 6.08 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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<PAGE> 21
IN WITNESS WHEREOF, the Company, the Subsidiaries and the
Purchasers have executed this Agreement as of the day and year first above
written.
TRANSCISCO INDUSTRIES, INC.
By /s/ Greg Saunders
---------------------------
Vice President, Controller
[Corporate Seal]
Attest:
/s/ Greg Saunders
- ---------------------------------
Asst. Secretary
TRANSCISCO RAIL SERVICES COMPANY
By /s/ Greg Saunders
---------------------------
Vice President, Controller
[Corporate Seal]
Attest:
/s/ Greg Saunders
- ---------------------------------
Asst. Secretary
TRANSCISCO LEASING COMPANY
By /s/ Greg Saunders
---------------------------
Vice President, Controller
[Corporate Seal]
Attest:
/s/ Greg Saunders
- ---------------------------------
Asst. Secretary
TRANSCISCO TRADING COMPANY
By /s/ Greg Saunders
---------------------------
Vice President, Controller
[Corporate Seal]
Attest:
/s/ Greg Saunders
- ---------------------------------
Asst. Secretary
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<PAGE> 22
PURCHASERS:
FURMAN SELZ SBIC, L.P.
By FURMAN SELZ SBIC INVESTMENTS INC.,
General Partner
By: /s/ Brian J. Friedman
--------------------------
President
/s/ James Dowling
------------------------------
James Dowling
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<PAGE> 23
Pro Rata Percentages
<TABLE>
<CAPTION>
Purchaser Percentage
--------- ----------
<S> <C>
Furman Selz 96 2/3%
Dowling 3 1/3%
</TABLE>
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<PAGE> 24
EXHIBIT B-1
SERIES A NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER
THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM REGISTRATION IS
AVAILABLE
THIS DOCUMENT AND THE INDEBTEDNESS OR OTHER OBLIGATION DESCRIBED HEREIN OR
EVIDENCED HEREBY IS SUBORDINATED, IN THE MANNER AND TO THE EXTENT SET FORTH IN
A SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT"), DATED AS OF AUGUST
___, 1995, TO CERTAIN INDEBTEDNESS (INCLUDING INTEREST) AT ANY TIME OWED BY THE
BORROWER OR OBLIGOR UNDER THIS DOCUMENT TO TRANSAMERICA BUSINESS CREDIT
CORPORATION AND ITS SUCCESSORS AND ASSIGNS, AND EACH HOLDER OF THIS DOCUMENT,
BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE SUBORDINATION AGREEMENT.
TRANSCISCO INDUSTRIES, INC.
Series A Senior Subordinated Note
Due July 31, 2000
Registered New York, New York
$[up to 2,000,000] August ___, 1995
TRANSCISCO INDUSTRIES, INC., a Delaware corporation (the
"Corporation"), TRANSCISCO RAIL SERVICES COMPANY, a California corporation
("TRSC"), TRANSCISCO LEASING COMPANY, a Delaware corporation ("TLC") and
TRANSCISCO TRADING COMPANY, a Delaware corporation ("TTC") (each of TRSC, TLC
and TTC each a "Subsidiary" and collectively, the "Subsidiaries"), for value
received, hereby jointly and severally promise to pay to the order of [FURMAN
SELZ SBIC, L.P., a Delaware limited partnership or JAMES DOWLING] or registered
assigns, the principal sum of [up to Two Million Dollars ($2,000,000)], on July
31, 2000 and to pay interest as set forth below.
The payment of principal and interest on this Note shall be in
such currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts.
1. Notes. This Note is issued pursuant to a certain
Note and Warrant Purchase Agreement, dated as of August ___, 1995 (the
"Purchase Agreement"), among the Corporation, the Subsidiaries, Furman Selz
SBIC, L.P. and James Dowling, providing for, among other things, the issuance
of (i) Series A Senior Subordinated Notes Due 2000 in an aggregate principal
amount of $2,000,000, (ii) Series B Senior Subordinated Notes Due 2000 in an
aggregate principal amount of $1,000,000 (the "B Notes" and, together with this
Note, the "Senior Subordinated Notes"), and (iii) warrants (the "Warrants") to
subscribe to up to 1,000,000 shares of the Common Stock, par value $.01 per
share, of the Corporation. This Series A Senior Subordinated Note Due 2000 and
any such Note subsequently issued upon exchange or transfer thereof are
hereinafter collectively called the "Notes".
2. Interest. Interest shall accrue on the unpaid
principal balance of this Note at an annual rate of 10% from the date hereof
until and including July 31, 1997; and thereafter at an annual rate of 12%.
Accrued but unpaid interest shall be due and payable on the unpaid principal
balance of this Note on each of July 31, 1996, July 31, 1997, and each January
31 and July 31 of each year thereafter, beginning on January
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<PAGE> 25
31, 1998. One-half of the interest due and payable on July 31, 1996 shall be
deferred and shall be payable on July 31, 1998 and one-half of the interest due
and payable on July 31, 1997 shall be deferred and shall be payable on July 31,
1999. Any interest deferred pursuant to the preceding sentence shall compound
and accrue interest at the applicable rate until paid. All interest hereunder
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months.
3. Payments of Interest and Principal. All payments of
principal and interest hereunder shall be paid to the holder hereof by wire
transfer in immediately available funds. Wire transfer payments of interest
and principal on this Note is conditioned upon the holder providing to the
Corporation duly authorized instructions for the wire transfer of such amounts
to the holder's designated account. If principal or interest on this Note
becomes due and payable on a day that is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day. For purposes of
this Note, "Business Day" means any day other than a Saturday, a Sunday or a
legal holiday under the laws of the State of New York.
4. Transfer or Exchange of Notes. The Corporation shall
keep at its office or agency maintained as provided in subsection (a) of
Section 12 a register in which the Corporation shall provide for the
registration of Notes and for the registration of transfer and exchange of
Notes. The holder of this Note may, at its option, and either in person or by
duly authorized attorney, surrender the same for registration of transfer or
exchange, as a whole or in part, in multiples of $100,000, at the office or
agency of the Corporation maintained as provided in subsection (a) of Section
12, and, without expense to such holder (except for taxes or governmental
charges imposed in connection therewith), receive from the Corporation and the
Subsidiaries in exchange therefor a Note or Notes in such denomination or
denominations as such holder may request, dated as of the date to which
interest has been paid on the Note or Notes so surrendered for transfer or
exchange, for the same aggregate principal amount as the then unpaid principal
amount of the Note or Notes so surrendered for transfer or exchange, and
registered in the name of such person or persons as may be designated by such
holder; provided, however, that this Note shall not by transferred to any
person whose primary line of business is the manufacture of railroad car
components or the leasing of railroad cars or to any person that is not a
United States citizen incorporated or organized under the laws of the United
States or a State thereof. Every Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or shall be
accompanied by a written instrument of transfer, satisfactory in form to the
Corporation, duly executed by the holder of such Note or his attorney, duly
authorized in writing. Every Note so made and delivered in exchange for this
Note shall in all other respects be in the same form and have the same terms as
this Note. No transfer or exchange of any Note shall be valid unless made in
the foregoing manner at such office or agency.
5. Loss, Theft, Destruction or Mutilation of Note. Upon
receipt of evidence satisfactory to the Corporation of the loss, theft,
destruction or mutilation of this Note, and, in the case of any such loss,
theft or destruction, upon receipt of an affidavit of loss from the holder
hereof reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation and
the Subsidiaries will make and deliver, in lieu of this Note, a new Note of
like tenor and unpaid principal amount and dated as of the date to which
interest has been paid on this Note.
6. Persons Deemed Owners; Holders. The Corporation and
the Subsidiaries may deem and treat the person in whose name any Note is
registered as the owner and holder of such Note for the purpose of receiving
payment of principal of and premium, if any, and interest on such Note and for
all other purposes whatsoever, whether or not such Note shall be overdue. With
respect to any Note at any time outstanding, the term "holder," as used herein,
shall be deemed to mean the person in whose name such Note is registered as
aforesaid at such time.
7. Prepayments. Prepayments on this Note may be made
only in accordance with the provisions of the Purchase Agreement and Sections 8
through 11 hereof.
8. Notice of Prepayment and Other Notices. The
Corporation shall give written notice of prepayment of this Note or any portion
hereof pursuant to Section 7 not less than 30 nor not more than 60
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<PAGE> 26
days prior to the date fixed for such prepayment. Such notice and all other
notices to be given to any holder of this Note shall be given by registered or
certified mail to the person in whose name this Note is registered at its
address designated on the register maintained by the Corporation on the date of
mailing such notice of prepayment or other notice.
9. Interest After Date Fixed for Prepayment. If this
Note or a portion hereof is called for prepayment as provided pursuant to
Section 7, this Note or such portion shall cease to bear interest on and after
the date fixed for such prepayment unless, upon presentation for the purpose of
prepayment, the Corporation and the Subsidiaries shall fail to pay this Note or
such portion, as the case may be, on such date, in which event this Note or
such portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest thereon, shall bear interest on and after the date
fixed for such prepayment and until paid at the rate of 12% per annum.
10. Surrender of Notes; Notation Thereon. Upon any
prepayment of a portion of the principal amount of this Note pursuant to
Section 7, the holder hereof, at its option, may require the Corporation and
the Subsidiaries to execute and deliver at the expense of the Corporation and
the Subsidiaries (other than for transfer taxes, if any), upon surrender of
this Note, a new Note registered in the name of such person or persons as may
be designated by such holder for the principal amount of this Note then
remaining unpaid, dated as of the date to which interest has been paid on the
principal amount of this Note then remaining unpaid, or may present this Note
to the Corporation for notation hereon of the payment of the portion of the
principal amount of this Note so prepaid.
11. Allocation of Payments. In the case of a prepayment
pursuant to Section 7 of less than all the Notes at the time outstanding, the
aggregate principal amount to be prepaid shall be allocated (in units of $1,000
or integral multiples thereof) among the holders of all the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective
aggregate unpaid principal amounts of the Notes (not theretofore called for
prepayment) then held by them, respectively, with adjustment, to the extent
practicable, to equalize for any prior unequal prepayments.
12. Affirmative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so long as any
Note shall be outstanding:
(a) Maintenance of Office. The Corporation will maintain
an office or agency in San Francisco, California (or such other place in the
United States of America as the Corporation may designate in writing to the
registered holder hereof), where the Notes may be presented for registration of
transfer and for exchange as herein provided, where notices and demands to or
upon the Corporation in respect of the Notes may be served and where, at the
option of the holders thereof, the Notes may be presented for payment. Until
the Corporation otherwise notifies the holders of the Notes, said office shall
be the principal office of the Corporation in San Francisco, California.
(b) Payment of Taxes. The Corporation will promptly pay
and discharge or cause to be paid and discharged, before the same shall become
in default, all lawful taxes and assessments imposed upon the Corporation or
any subsidiary or upon the income and profits of the Corporation or any
subsidiary, or upon any property, real, personal or mixed, belonging to the
Corporation or any subsidiary, or upon any part thereof by the United States or
any State thereof, as well as all lawful claims for labor, materials and
supplies which, if unpaid, would become a lien or charge upon such property or
any part thereof; provided, however, that the Corporation shall not be required
to pay and discharge or to cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as both (x) the Corporation has set
aside adequate reserves for such tax, assessment, charge, levy or claim and
(y)(i) the Corporation shall be contesting the validity thereof in good faith
by appropriate proceedings or (ii) the Corporation shall, in its good faith
judgment, deem the validity thereof to be questionable and the party to whom
such tax, assessment, charge, levy or claim is allegedly owed shall not have
made written demand for the payment thereof.
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<PAGE> 27
(c) Corporate Existence. The Corporation will do or
cause to be done all things necessary and lawful to preserve and keep in full
force and effect its corporate existence, rights and franchises and the
corporate existence, rights and franchises of its subsidiaries under the laws
of the United States or any State thereof or the District of Columbia;
provided, however, that nothing in this subsection (c) shall prevent (i) a
consolidation or merger of, or a sale, transfer or disposition of all or any
substantial part of the property and assets of, the Corporation not prohibited
by the provisions of Section 13, or (ii) the abandonment or termination of any
rights or franchises of the Corporation, if such consolidation, merger, sale,
transfer, disposition, abandonment or termination is, in the good faith
business judgment of the Corporation, in the best interests of the Corporation
and not disadvantageous to the holder of this Note.
(d) Maintenance of Property. The Corporation will, and
the Corporation will cause its subsidiaries to, at all times maintain and keep,
or cause to be maintained and kept, in good repair, working order and condition
all significant properties of the Corporation and its subsidiaries used in the
conduct of the business of the Corporation and its subsidiaries, and will, and
will cause its subsidiaries to, from time to time make or cause to be made all
needful and proper repairs, renewals, replacements, betterments and
improvements thereto, so that the business carried on in connection therewith
may be properly and advantageously conducted at all times; provided, however,
that nothing in this subsection (d) shall require (i) the making of any repair
or renewal or (ii) the continuance of the operation and maintenance of any
property or (iii) the retention of any assets (the sale or other disposition of
which would not be prohibited by Section 13), if such action (or inaction) is,
in the good faith business judgment of the Corporation, in the best interests
of the Corporation.
(e) Insurance. The Corporation will, and the Corporation
will cause its subsidiaries to (i) keep adequately insured, by financially
sound and reputable insurers, all property of a character usually insured by
corporations engaged in the same or a similar business similarly situated
against loss or damage of the kinds customarily insured against by such
corporations and (ii) carry, with financially sound and reputable insurers,
such other insurance (including, without limitation, liability insurance) in
such amounts as are available at reasonable expense and to the extent believed
necessary in the good faith business judgment of the Corporation.
(f) Keeping of Books. The Corporation will at all times
keep proper books of record and account in which proper entries will be made of
its transactions in accordance with generally accepted accounting principles
consistently applied.
(g) Transactions with Affiliates. Neither the
Corporation nor any of its subsidiaries will enter into any transaction or
series of transactions with any director, officer, stockholder, employee or
affiliate of the Corporation or its subsidiaries (other than (i) a transaction
or series of transactions that involves, individually, less than $25,000,
provided that the aggregate of all such transactions or series of transactions
involves less than $500,000 and (ii) transactions by and among any of the
Company and/or any Subsidiary), except on terms and conditions that, in the
reasonable judgment of the Board of Directors of the Corporation (as evidenced
by the approval of not less than 66 2/3% of the then-existing Directors), are
no less favorable to the Corporation or its direct or indirect subsidiaries, as
the case may be, than the terms and conditions which the Corporation or such
subsidiary, as the case may be, could obtain in a transaction with an
unaffiliated person on an arm's length basis.
(h) Notice of Default. If any one or more events which
constitute, or which with notice or lapse of time or both would constitute, an
Event of Default under Section 15 shall occur, or if the holder of any Note
shall demand payment or take any other action permitted upon the occurrence of
any such Event of Default, the Corporation shall immediately after it becomes
aware that any such event would with or without notice or lapse of time or both
constitute such an Event or that such demand has been made or that any such
action has been taken, give notice to the holder of this Note, specifying the
nature of such event or of such demand or action, as the case may be.
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<PAGE> 28
13. Negative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so long as any
Note shall be outstanding:
(a) Consolidation, Merger and Sale. The Corporation will
not consolidate or merge with or into, or sell or otherwise dispose of all or
substantially all of its property to, any other corporation, unless
(i) the Corporation shall have obtained the written
consent of the holders of more than 66 2/3% in principal amount of the
Notes then outstanding;
(ii) the Corporation or such other corporation shall not
otherwise be in default in the performance or observance of any
covenant, agreement or condition of the Notes; and
(iii) the holder of this Note shall have received, in
connection therewith, an opinion of counsel for the Corporation (or
other counsel reasonably satisfactory to the holder) in form and
substance satisfactory to the holder, to the effect that any such
consolidation, merger, sale or conveyance and any such assumption
complies with the provisions of this paragraph (a).
Following the consummation of such merger, sale, conveyance or
other disposition, the Corporation will, upon the written request of the holder
of any Note, provide such holder with a copy of the agreement or agreements
pursuant to which such consolidation, merger, sale, conveyance or other
disposition was effected as promptly as possible.
(b) Restricted Payments. The Corporation shall not and
shall cause each of its subsidiaries not to (i) declare or pay any dividend on,
or authorize or make any distribution in respect of, shares of any class of its
or their stock (except dividends or distributions payable in shares of its
stock and except for dividends paid by direct or indirect wholly-owned
subsidiaries), or (ii) authorize or make any purchase, redemption or
acquisition for value of, any shares of any class of its their stock.
(c) Restrictions on Senior Subordinated Debt. The
Corporation shall not incur, and shall cause its subsidiaries not to incur,
directly or indirectly, any Debt (as defined below) which is senior in right of
payment to the Senior Subordinated Notes and is subordinate or junior in any
respect in right of payment to any other Debt. As used herein, "Debt" of a
person means at any date, without duplication, whether or not contingent, (i)
all obligations for borrowed money of such person, (ii) all obligations of such
person evidenced by bonds, debentures, notes, letters of credit or similar
instruments, (iii) all obligations of such person to pay the deferred purchase
price of property or services, except accounts payable and other liabilities
arising in the ordinary course of business, (iv) all reimbursement obligations
of such person, (v) all obligations of such person as lessee under capital
leases, (vi) all debt of others secured by a lien on any asset of such person
and (vii) any Debt of others guaranteed by such person.
(d) Disposition of Assets Not in the Ordinary Course. In
the event the Corporation or any subsidiary sells, transfers, assigns or
otherwise disposes of any asset not in the ordinary course of business, the
Corporation shall, or cause such subsidiary to, (i) use the proceeds of such
disposition to repay any Debt which is senior in right of payment to the Notes,
(ii) reinvest such proceeds in the Corporation or any wholly-owned subsidiary
of the Corporation, or (iii) prepay the Senior Subordinated Notes.
(e) Limitation on Payment Restrictions Affecting
Subsidiaries. The Corporation shall not, and shall not permit any subsidiary
of the Corporation to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction which by its terms
expressly restricts the ability of any such subsidiary to (i) pay dividends or
make any other distributions on such subsidiary's capital stock or pay any Debt
owed to the corporation or any subsidiary of the Corporation, (ii) make any
loans or advances to the Corporation or any subsidiary of the Corporation or
(iii) transfer any of its property or assets to the Corporation or any
subsidiary of the Corporation, except for any restrictions existing under
agreements in effect at the time of, or entered into concurrently with, the
issuance of this Note, including the restrictions contained in the Credit
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<PAGE> 29
Agreement (as defined below), to the extent that such restrictions are set
forth in such agreement as in effect on the date of the issuance of this Note.
As used herein, "Credit Agreement" means that certain Credit Agreement between
Transamerica Business Credit Corporation (the "Bank"), the Corporation and the
Subsidiaries dated August ___, 1995.
14. Modification by Holders; Waiver. The Corporation and
the Subsidiaries may, with the written consent of the holders of not less than
66 2/3% in principal amount of the Notes then outstanding, modify the terms and
provisions of the Notes or the rights of the holders of the Notes or the
obligations of the Corporation and the Subsidiaries thereunder, and the
observance by the Corporation and the Subsidiaries of any term or provision of
the Notes may be waived with the written consent of the holders of not less
than 66 2/3% in principal amount of the Notes then outstanding; provided,
however, that no such modification or waiver shall:
(a) change the maturity of any Note or reduce the
principal amount thereof or reduce the rate or extend the time of
payment of interest thereon or reduce the amount or change the time of
payment of premium payable on any prepayment thereof without the
consent of the holder of each Note so affected; or
(b) give any Note any preference over any other Note; or
(c) reduce the applicable aforesaid percentages of Notes,
the consent of the holders of which is required for any such
modification.
Any such modification or waiver shall apply equally to all the
holders of the Notes and shall be binding upon them, upon each future holder of
any Note and upon the Corporation and the Subsidiaries, whether or not such
Note shall have been marked to indicate such modification or waiver, but any
Note issued thereafter shall bear a notation referring to any such modification
or waiver. Promptly after obtaining the written consent of the holders as
herein provided, the Corporation shall transmit a copy of such modification or
waiver to all the holders of the Notes at the time outstanding.
15. Events of Default; Acceleration. If any one or more
of the following events, herein called Events of Default, shall occur, for any
reason whatsoever, and whether such occurrence shall, on the part of the
Corporation or any Subsidiary, be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of a court of competent jurisdiction or any order, rule or
regulation of any administrative or other governmental authority and such Event
of Default shall be continuing:
(a) default shall be made in the payment of the principal
of any Note or the premium thereon, if any, when and as the same shall
become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise and such default shall
continue for a period of five days; or
(b) default shall be made in the payment of any
installment of interest on any Note according to its terms when and as
the same shall become due and payable and such default shall continue
for a period of ten days; or
(c) default or breach shall be or shall have been made in
the due observance or performance of any representation, covenant,
condition or agreement on the part of the Corporation or the
Subsidiaries to be observed or performed pursuant to the Purchase
Agreement or the terms hereof and such default shall continue for 15
days after written notice thereof, specifying such default and
requesting that the same be remedied, shall have been given to the
Corporation by the holder or holders of at least 25% of the principal
amount of the Notes then outstanding (the Corporation to give
forthwith
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<PAGE> 30
to all other holders of Notes at the time outstanding written notice
of the receipt of such notice specifying the default referred to
therein); or
(d) the entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Corporation or
any subsidiary in an involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Corporation or any
subsidiary or for any substantial part of any of their respective
property, or ordering the winding-up or liquidation of any of their
affairs and the continuance of any such decree or order unstayed and
in effect for a period of 30 consecutive days; or
(e) the commencement by the Corporation or any subsidiary
of a voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar laws, or the consent by
the Corporation or any subsidiary to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Corporation or any
subsidiary or for any substantial part of any of their respective
property, or the making by the Corporation or any subsidiary of any
assignment for the benefit of creditors, or the failure of the
Corporation or any subsidiary generally to pay its debts as such debts
become due, or the taking of corporate action by the Corporation or
any subsidiary in furtherance of or which might reasonably be expected
to result in any of the foregoing; or
(f) (i) failure to make any payment in respect of any
Debt of the Corporation or its subsidiaries having an aggregate
principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than $50,000 when due (whether
by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto; or
(ii) failure by the Corporation or its subsidiaries to perform or
observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating
to any such Debt referred to in clause (i) above, and such failure
continues after the applicable grace or notice period, if any,
specified in the document relating thereto if the effect of such
failure, event or condition is to cause, or to permit the holder or
holders of such Debt or beneficiary or beneficiaries of such Debt (or
a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause such Debt to be declared to be due and
payable prior to its stated maturity; or
(g) final judgment for the payment of money in excess
$50,000 shall be rendered against the Corporation or any subsidiary
and the same shall remain undischarged for a period of 30 days during
which execution shall not be effectively stayed;
(h) a Change of Control (as defined below) shall have
occurred;
then, the holder or holders of at least 25% in aggregate principal amount of
the Notes at the time outstanding may, at its or their option, by written
notice to the Corporation and the Subsidiaries, declare all the Notes to be,
and all the Notes shall thereupon be and become, forthwith due and payable
together with interest accrued thereon without presentment, demand, protest or
further notice of any kind, all of which are expressly waived to the extent
permitted by law; provided, however, that upon the occurrence of any of the
events specified in subsections (d) or (e) of this Section 15, all the Notes
shall thereupon be and become, forthwith due and payable together with interest
accrued thereon without any action required by the holders thereof whatsoever.
As used herein, "Change of Control" means (i) the Corporation merges or
consolidates with another corporation (other than the consolidation or merger
of a wholly- owned subsidiary with or into the Corporation or with or into any
other wholly-owned subsidiary, and other than a merger involving the
Corporation in which the holders of at least 51% of the outstanding Common
Stock, on a fully-diluted basis, immediately prior to such merger hold at least
51% of the outstanding capital stock of the surviving corporation in any such
merger or consolidation, on a
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<PAGE> 31
fully-diluted basis, immediately after the merger); (ii) any "person" or
"group" (as such terms are used in Section 13(d) of the Exchange Act and the
regulations promulgated hereunder) is or becomes a beneficial owner, directly
or indirectly, of securities of the Corporation having a majority of the total
number of votes that may be cast for the election of directors of the
Corporation; (iii) the Corporation and its subsidiaries on a consolidated basis
sells all or substantially all of their consolidated assets; (iv) as the result
of, or in connection with, any cash tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any combination
of the foregoing transactions (a "Transaction"), the persons who were directors
of the Corporation before the Transaction cease to constitute a majority of the
Board of Directors of the Corporation or any successor to the Corporation; or
(v) any director is elected to the Corporation's Board of Directors without
being nominated thereto by a majority of the Corporation's Independent
Directors (as such term is defined in the Corporation's By-Laws as in effect on
the date hereof).
At any time after any declaration of acceleration has been
made as provided in this Section 15 (except as provided under subsections (d)
or (e) thereunder), the holders of at least 66 2/3% in principal amount of the
Notes then outstanding may, by notice to the Corporation, rescind such
declaration and its consequences, if (i) the Corporation and the Subsidiaries
have paid all overdue installments of interest on the Notes and all principal
(and premium, if any) that has become due otherwise than by such declaration of
acceleration; and (ii) all other defaults and Events of Default (other than
nonpayments of principal and interest that have become due solely by reason of
acceleration) shall have been remedied or cured or shall have been waived
pursuant to this paragraph; provided, however, that no such rescission shall
extend to or affect any subsequent default or Event of Default or impair any
right consequent thereon.
WITHOUT LIMITING THE FOREGOING, THE CORPORATION AND THE
SUBSIDIARIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS NOTE OR THE NOTES AND AGREES THAT ANY SUCH
PROCEEDING MAY, IF THE HOLDER SO ELECTS, BE BROUGHT AND ENFORCED IN THE SUPREME
COURT OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND THE CORPORATION AND THE SUBSIDIARIES HEREBY
WAIVE ANY OBJECTION TO JURISDICTION OR VENUE IN ANY SUCH PROCEEDING COMMENCED
IN SUCH COURT. THE CORPORATION AND THE SUBSIDIARIES FURTHER AGREE THAT ANY
PROCESS REQUIRED TO BE SERVED ON THEM FOR PURPOSES OF ANY SUCH PROCEEDING MAY
BE SERVED ON THEM, WITH THE SAME EFFECT AS PERSONAL SERVICE ON THEM WITHIN THE
STATE OF DELAWARE, BY REGISTERED MAIL ADDRESSED TO THEM AT THE OFFICE OR AGENCY
SET FORTH IN SECTION 22 FOR PURPOSES OF NOTICES HEREUNDER.
16. Suits for Enforcement. In case any one or more of
the Events of Default specified in Section 15 of this Note shall happen and be
continuing, the holder of this Note may proceed to protect and enforce its
rights by suit in equity, action at law and/or by other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Note or in aid of the exercise of any power granted in this Note, or may
proceed to enforce the payment of this Note or to enforce any other legal or
equitable right of the holder of this Note.
In case of any default under any Note, the Corporation and the
Subsidiaries, jointly and severally, will pay to the holder thereof such
amounts as shall be sufficient to cover the costs and expenses of such holder
due to said default, including, without limitation, collection costs and
reasonable attorneys' fees, to the extent actually incurred.
17. Remedies Cumulative. No remedy herein conferred upon
the holder of this Note is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
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18. Remedies Not Waived. No course of dealing between
the Corporation, the Subsidiaries and the holders of this Note or any delay on
the part of the holder hereof in exercising any rights hereunder shall operate
as a waiver of any right of any holder of this Note.
19. Subordination. (a) The obligation of the Corporation
and the Subsidiaries to pay the principal of and interest on this Note, shall
be subordinate and junior in right of payment to the extent set forth in the
following paragraphs (i), (ii) and (iii) to all Senior Debt. As used herein,
"Senior Debt" means the principal of, premium, if any, and interest (including
post-petition interest at the contract rate in any bankruptcy, insolvency or
similar proceeding with respect to the Corporation) on, and other amounts
payable on or in connection with indebtedness for money borrowed by the
Corporation or the Subsidiaries, whether or not outstanding on the date of this
Note, from, of capital lease obligations payable to any bank or other financial
institution regularly engaged in the business of making loans or extending
credit; provided, that Senior Debt shall not include any such indebtedness or
capital lease obligations which (a) is guaranteed by any other entity or person
(other than a subsidiary of the Corporation); (b) is convertible into equity of
the Corporation or any subsidiary or which was purchased from the Corporation
or any subsidiary by such bank or financial institution along with capital
stock, warrants or other rights to receive an equity interest, profit
participation or similar rights in the Corporation or such subsidiary; or (c)
provides in any documentation evidencing such indebtedness or capital lease
obligation that such indebtedness or capital lease obligation is not superior
in right of payment to the Senior Subordinated Notes.
(i) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or any
receivership proceedings in connection therewith, relative to the
Corporation or its creditors or its property, and in the event of any
proceedings for voluntary liquidation, dissolution or other winding up
of the Corporation, whether or not involving insolvency or bankruptcy
proceedings, then all Senior Debt shall first be paid in full, before
any payment on account of principal or interest is made upon this
Note.
(ii) In any of the proceedings referred to in paragraph
(i) above, any payment or distribution of any kind or character,
whether in cash, property, stock or obligations which may be payable
or deliverable in respect of this Note shall be paid or delivered
directly to the holders of Senior Debt for application in payment
thereof, unless and until all Senior Debt shall have been paid in
full.
(iii) In the event (A) the Corporation shall default under any
Senior Debt obligation and the effect of such default is to accelerate
the maturity of such obligation, (B) the Corporation shall default
under any Senior Debt obligation and as a result thereof the holder
thereof shall cause such obligation to become due prior to the stated
maturity thereof, (C) the Corporation shall not pay a Senior Debt
obligation at maturity or (D) the Corporation shall not make any
payment of principal or interest under any document evidencing Senior
Debt when due, then upon the occurrence of (x) receipt by the holder
of this Note of written notice from the holder of such Senior Debt or
(y) if such event of default specified in clauses (A) through (D)
above results from the acceleration of the Senior Subordinated Notes,
the date of such acceleration, no such payment may be made by the
Corporation upon or in respect of the Notes for a period (the "Payment
Blockage Period") commencing on the earlier of the date of receipt of
such notice or the date of such acceleration and ending 179 days
thereafter (unless such Payment Blockage Period shall be terminated
earlier by written notice to the holder hereof from the holder of such
Senior Debt commencing the Payment Blockage Period). Notwithstanding
anything herein to the contrary, in no event shall a Payment Blockage
Period extend beyond 179 days from the date the payment on the Notes
was due. Not more than one Payment Blockage Period with respect to
this Note may be commenced during any period of 360 consecutive days.
For all purposes of this Section 19(a)(iii), no event of default which
existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to Senior Debt initiating such
Payment Blockage Period shall be, or be made, the basis for the
commencement of a second Payment Blockage Period by the holder of such
Senior Debt whether or not within a period of 360 consecutive days
unless such event of default shall have been cured or waived for a
period of not less than 30 consecutive days.
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(b) Subject to the payment in full of all Senior Debt as
aforesaid, the holder of this Note shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of any kind or
character, whether in cash, property, stock or obligations, which may be
payable or deliverable to the holders of Senior Debt, until the principal of,
and interest on, the Senior Subordinated Notes shall be paid in full, and, as
between the Corporation, its creditors other than the holders of Senior Debt,
and the holders of this Note, no such payment or distribution made to the
holders of Senior Debt by virtue of this Section 19 which otherwise would have
been made to the holder of this Note shall be deemed a payment by the
Corporation on account of the Senior Debt, it being understood that the
provisions of this Section 19 are and are intended solely for the purposes of
defining the relative rights of the holder of this Note, on the one hand, and
the holders of the Senior Debt, on the other hand. Subject to the rights, if
any, under this Section 19 of holders of Senior Debt to receive cash, property,
stock or obligations otherwise payable or deliverable to the holder of this
Note, nothing herein shall either impair, as between the Corporation and the
holder of this Note, the obligation of the Corporation, which is unconditional
and absolute, to pay to the holder hereof the principal hereof and interest
hereon in accordance with its terms and the provisions of this Note or prevent
the holder of this Note from exercising all remedies otherwise permitted by
applicable law or hereunder upon default hereunder. The failure to make a
payment on account of principal or interest on the Notes by reason of any
provision of this Section 19 shall not be construed as preventing the
occurrence of an Event of Default under Section 15.
(c) Notwithstanding any provision contained herein to the
contrary, the indebtedness evidenced by this Note shall not (i) be subordinated
to claims of any trade creditors of the Corporation or (ii) be subordinated in
right of payment to the payment of any existing or future Debt of the
Corporation which is not Senior Debt; but rather shall rank equally with all
existing and future unsecured Debt of the Corporation except for such Debt as
may be subordinate thereto and as may be required by bankruptcy or other laws
affecting the rights of creditors generally.
20. Covenants Bind Successors and Assigns. All the
covenants, stipulations, promises and agreements in this Note contained by or
on behalf of the Corporation and the Subsidiaries shall bind their respective
successors and assigns, whether so expressed or not.
21. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
22. 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.
23. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by first class
registered mail, postage prepaid,
(a) if to the Corporation or the Subsidiaries, at:
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to the holder of this Note, to its address set
forth in the register maintained by the Corporation for the
registration of transfer and exchange of Notes.
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<PAGE> 34
IN WITNESS WHEREOF, each of the undersigned has caused this
Note to be signed in its corporate name by one of its officers thereunto duly
authorized and to be dated as of the day and year first above written.
TRANSCISCO INDUSTRIES, INC.
By
-----------------------------------
President
[Corporate Seal]
Attest:
- ------------------------------
Secretary
TRANSCISCO RAIL SERVICES COMPANY
By
-----------------------------------
President
[Corporate Seal]
Attest:
- ------------------------------
Secretary
TRANSCISCO LEASING COMPANY
By
-----------------------------------
President
[Corporate Seal]
Attest:
- ------------------------------
Secretary
TRANSCISCO TRADING COMPANY
By
-----------------------------------
President
[Corporate Seal]
Attest:
- ------------------------------
Secretary
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<PAGE> 35
EXHIBIT B-2
SERIES B NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER
THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM REGISTRATION IS
AVAILABLE
THIS DOCUMENT AND THE INDEBTEDNESS OR OTHER OBLIGATION DESCRIBED HEREIN OR
EVIDENCED HEREBY IS SUBORDINATED, IN THE MANNER AND TO THE EXTENT SET FORTH IN
A SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT"), DATED AS OF AUGUST
___, 1995, TO CERTAIN INDEBTEDNESS (INCLUDING INTEREST) AT ANY TIME OWED BY THE
BORROWER OR OBLIGOR UNDER THIS DOCUMENT TO TRANSAMERICA BUSINESS CREDIT
CORPORATION AND ITS SUCCESSORS AND ASSIGNS, AND EACH HOLDER OF THIS DOCUMENT,
BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE SUBORDINATION AGREEMENT.
TRANSCISCO INDUSTRIES, INC.
Series B Senior Subordinated Note
Due July 31, 2000
Registered New York, New York
$[up to 1,000,000] August ___, 1995
TRANSCISCO INDUSTRIES, INC., a Delaware corporation (the
"Corporation"), TRANSCISCO RAIL SERVICES COMPANY, a California corporation
("TRSC"), TRANSCISCO LEASING COMPANY, a Delaware corporation ("TLC") and
TRANSCISCO TRADING COMPANY, a Delaware corporation ("TTC") (each of TRSC, TLC
and TTC each a "Subsidiary" and collectively, the "Subsidiaries"), for value
received, hereby jointly and severally promise to pay to the order of [FURMAN
SELZ SBIC, L.P., a Delaware limited partnership or JAMES DOWLING] or registered
assigns, the principal sum of [up to One Million Dollars ($1,000,000)], on July
31, 2000 and to pay interest as set forth below.
The payment of principal and interest on this Note shall be in
such currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts.
1. Notes. This Note is issued pursuant to a certain
Note and Warrant Purchase Agreement, dated as of August ___, 1995 (the
"Purchase Agreement"), among the Corporation, the Subsidiaries, Furman Selz
SBIC, L.P. and James Dowling, providing for, among other things, the issuance
of (i) Series A Senior Subordinated Notes Due 2000 in an aggregate principal
amount of $2,000,000, (ii) Series B Senior Subordinated Notes Due 2000 in an
aggregate principal amount of $1,000,000 (the "B Notes" and, together with this
Note, the "Senior Subordinated Notes"), and (iii) warrants (the "Warrants") to
subscribe to up to 1,000,000 shares of the Common Stock, par value $.01 per
share, of the Corporation. This Series B Senior Subordinated Note Due 2000 and
any such Note subsequently issued upon exchange or transfer thereof are
hereinafter collectively called the "Notes".
2. Interest. Interest shall accrue on the unpaid
principal balance of this Note at an annual rate of 14%. Accrued but unpaid
interest shall be due and payable on the unpaid principal balance of this Note
on each of July 31, 1996, July 31, 1997, and each January 31 and July 31 of
each year thereafter, beginning on January 31, 1998. One-half of the interest
due and payable on July 31, 1996 shall be deferred and
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<PAGE> 36
shall be payable on July 31, 1998 and one-half of the interest due and payable
on July 31, 1997 shall be deferred and shall be payable on July 31, 1999. Any
interest deferred pursuant to the preceding sentence shall compound and accrue
interest at the applicable rate until paid. All interest hereunder shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
3. Payments of Interest and Principal. All payments of
principal and interest hereunder shall be paid to the holder hereof by wire
transfer in immediately available funds. Wire transfer payments of interest
and principal on this Note is conditioned upon the holder providing to the
Corporation duly authorized instructions for the wire transfer of such amounts
to the holder's designated account. If principal or interest on this Note
becomes due and payable on a day that is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day. For purposes of
this Note, "Business Day" means any day other than a Saturday, a Sunday or a
legal holiday under the laws of the State of New York.
4. Transfer or Exchange of Notes. The Corporation shall
keep at its office or agency maintained as provided in subsection (a) of
Section 12 a register in which the Corporation shall provide for the
registration of Notes and for the registration of transfer and exchange of
Notes. The holder of this Note may, at its option, and either in person or by
duly authorized attorney, surrender the same for registration of transfer or
exchange, as a whole or in part, in multiples of $100,000, at the office or
agency of the Corporation maintained as provided in subsection (a) of Section
12, and, without expense to such holder (except for taxes or governmental
charges imposed in connection therewith), receive from the Corporation and the
Subsidiaries in exchange therefor a Note or Notes in such denomination or
denominations as such holder may request, dated as of the date to which
interest has been paid on the Note or Notes so surrendered for transfer or
exchange, for the same aggregate principal amount as the then unpaid principal
amount of the Note or Notes so surrendered for transfer or exchange, and
registered in the name of such person or persons as may be designated by such
holder; provided, however, that this Note shall not by transferred to any
person whose primary line of business is the manufacture of railroad car
components or the leasing of railroad cars or to any person that is not
incorporated or organized under the laws of the United States or a State
thereof. Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or shall be accompanied by a written
instrument of transfer, satisfactory in form to the Corporation, duly executed
by the holder of such Note or his attorney, duly authorized in writing. Every
Note so made and delivered in exchange for this Note shall in all other
respects be in the same form and have the same terms as this Note. No transfer
or exchange of any Note shall be valid unless made in the foregoing manner at
such office or agency.
5. Loss, Theft, Destruction or Mutilation of Note. Upon
receipt of evidence satisfactory to the Corporation of the loss, theft,
destruction or mutilation of this Note, and, in the case of any such loss,
theft or destruction, upon receipt of an affidavit of loss from the holder
hereof reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation and
the Subsidiaries will make and deliver, in lieu of this Note, a new Note of
like tenor and unpaid principal amount and dated as of the date to which
interest has been paid on this Note.
6. Persons Deemed Owners; Holders. The Corporation and
the Subsidiaries may deem and treat the person in whose name any Note is
registered as the owner and holder of such Note for the purpose of receiving
payment of principal of and premium, if any, and interest on such Note and for
all other purposes whatsoever, whether or not such Note shall be overdue. With
respect to any Note at any time outstanding, the term "holder," as used herein,
shall be deemed to mean the person in whose name such Note is registered as
aforesaid at such time.
7. Prepayments. Prepayments on this Note may be made
only in accordance with the provisions of the Purchase Agreement and Sections 8
through 11 hereof.
8. Notice of Prepayment and Other Notices. The
Corporation shall give written notice of prepayment of this Note or any portion
hereof pursuant to Section 7 not less than 30 nor not more than 60 days prior
to the date fixed for such prepayment. Such notice and all other notices to be
given to any holder of
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<PAGE> 37
this Note shall be given by registered or certified mail to the person in whose
name this Note is registered at its address designated on the register
maintained by the Corporation on the date of mailing such notice of prepayment
or other notice.
9. Interest After Date Fixed for Prepayment. If this
Note or a portion hereof is called for prepayment as provided pursuant to
Section 7, this Note or such portion shall cease to bear interest on and after
the date fixed for such prepayment unless, upon presentation for the purpose of
prepayment, the Corporation and the Subsidiaries shall fail to pay this Note or
such portion, as the case may be, on such date, in which event this Note or
such portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest thereon, shall bear interest on and after the date
fixed for such prepayment and until paid at the rate of 14% per annum.
10. Surrender of Notes; Notation Thereon. Upon any
prepayment of a portion of the principal amount of this Note pursuant to
Section 7, the holder hereof, at its option, may require the Corporation and
the Subsidiaries to execute and deliver at the expense of the Corporation and
the Subsidiaries (other than for transfer taxes, if any), upon surrender of
this Note, a new Note registered in the name of such person or persons as may
be designated by such holder for the principal amount of this Note then
remaining unpaid, dated as of the date to which interest has been paid on the
principal amount of this Note then remaining unpaid, or may present this Note
to the Corporation for notation hereon of the payment of the portion of the
principal amount of this Note so prepaid.
11. Allocation of Payments. In the case of a prepayment
pursuant to Section 7 of less than all the Notes at the time outstanding, the
aggregate principal amount to be prepaid shall be allocated (in units of $1,000
or integral multiples thereof) among the holders of all the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective
aggregate unpaid principal amounts of the Notes (not theretofore called for
prepayment) then held by them, respectively, with adjustment, to the extent
practicable, to equalize for any prior unequal prepayments.
12. Affirmative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so long as any
Note shall be outstanding:
(a) Maintenance of Office. The Corporation will maintain
an office or agency in San Francisco, California (or such other place in the
United States of America as the Corporation may designate in writing to the
registered holder hereof), where the Notes may be presented for registration of
transfer and for exchange as herein provided, where notices and demands to or
upon the Corporation in respect of the Notes may be served and where, at the
option of the holders thereof, the Notes may be presented for payment. Until
the Corporation otherwise notifies the holders of the Notes, said office shall
be the principal office of the Corporation in San Francisco, California.
(b) Payment of Taxes. The Corporation will promptly pay
and discharge or cause to be paid and discharged, before the same shall become
in default, all lawful taxes and assessments imposed upon the Corporation or
any subsidiary or upon the income and profits of the Corporation or any
subsidiary, or upon any property, real, personal or mixed, belonging to the
Corporation or any subsidiary, or upon any part thereof by the United States or
any State thereof, as well as all lawful claims for labor, materials and
supplies which, if unpaid, would become a lien or charge upon such property or
any part thereof; provided, however, that the Corporation shall not be required
to pay and discharge or to cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as both (x) the Corporation has set
aside adequate reserves for such tax, assessment, charge, levy or claim and
(y)(i) the Corporation shall be contesting the validity thereof in good faith
by appropriate proceedings or (ii) the Corporation shall, in its good faith
judgment, deem the validity thereof to be questionable and the party to whom
such tax, assessment, charge, levy or claim is allegedly owed shall not have
made written demand for the payment thereof.
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<PAGE> 38
(c) Corporate Existence. The Corporation will do or
cause to be done all things necessary and lawful to preserve and keep in full
force and effect its corporate existence, rights and franchises and the
corporate existence, rights and franchises of its subsidiaries under the laws
of the United States or any State thereof or the District of Columbia;
provided, however, that nothing in this subsection (c) shall prevent (i) a
consolidation or merger of, or a sale, transfer or disposition of all or any
substantial part of the property and assets of, the Corporation not prohibited
by the provisions of Section 13, or (ii) the abandonment or termination of any
rights or franchises of the Corporation, if such consolidation, merger, sale,
transfer, disposition, abandonment or termination is, in the good faith
business judgment of the Corporation, in the best interests of the Corporation
and not disadvantageous to the holder of this Note.
(d) Maintenance of Property. The Corporation will, and
the Corporation will cause its subsidiaries to, at all times maintain and keep,
or cause to be maintained and kept, in good repair, working order and condition
all significant properties of the Corporation and its subsidiaries used in the
conduct of the business of the Corporation and its subsidiaries, and will, and
will cause its subsidiaries to, from time to time make or cause to be made all
needful and proper repairs, renewals, replacements, betterments and
improvements thereto, so that the business carried on in connection therewith
may be properly and advantageously conducted at all times; provided, however,
that nothing in this subsection (d) shall require (i) the making of any repair
or renewal or (ii) the continuance of the operation and maintenance of any
property or (iii) the retention of any assets (the sale or other disposition of
which would not be prohibited by Section 13), if such action (or inaction) is,
in the good faith business judgment of the Corporation, in the best interests
of the Corporation.
(e) Insurance. The Corporation will, and the Corporation
will cause its subsidiaries to (i) keep adequately insured, by financially
sound and reputable insurers, all property of a character usually insured by
corporations engaged in the same or a similar business similarly situated
against loss or damage of the kinds customarily insured against by such
corporations and (ii) carry, with financially sound and reputable insurers,
such other insurance (including, without limitation, liability insurance) in
such amounts as are available at reasonable expense and to the extent believed
necessary in the good faith business judgment of the Corporation.
(f) Keeping of Books. The Corporation will at all times
keep proper books of record and account in which proper entries will be made of
its transactions in accordance with generally accepted accounting principles
consistently applied.
(g) Transactions with Affiliates. Neither the
Corporation nor any of its subsidiaries will enter into any transaction or
series of transactions with any director, officer, stockholder, employee or
affiliate of the Corporation or its subsidiaries (other than (i) a transaction
or series of transactions that involves, individually, less than $25,000,
provided that the aggregate of all such transactions or series of transactions
involves less than $500,000 and (ii) transactions by and among any of the
Company and/or any Subsidiary), except on terms and conditions that, in the
reasonable judgment of the Board of Directors of the Corporation (as evidenced
by the approval of not less than 66 2/3% of the then-existing Directors), are
no less favorable to the Corporation or its direct or indirect subsidiaries, as
the case may be, than the terms and conditions which the Corporation or such
subsidiary, as the case may be, could obtain in a transaction with an
unaffiliated person on an arm's length basis.
(h) Notice of Default. If any one or more events which
constitute, or which with notice or lapse of time or both would constitute, an
Event of Default under Section 15 shall occur, or if the holder of any Note
shall demand payment or take any other action permitted upon the occurrence of
any such Event of Default, the Corporation shall immediately after it becomes
aware that any such event would with or without notice or lapse of time or both
constitute such an Event or that such demand has been made or that any such
action has been taken, give notice to the holder of this Note, specifying the
nature of such event or of such demand or action, as the case may be.
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<PAGE> 39
13. Negative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so long as any
Note shall be outstanding:
(a) Consolidation, Merger and Sale. The Corporation will
not consolidate or merge with or into, or sell or otherwise dispose of all or
substantially all of its property to, any other corporation, unless
(i) the Corporation shall have obtained the written
consent of the holders of more than 66 2/3% in principal amount of the
Notes then outstanding;
(ii) the Corporation or such other corporation shall not
otherwise be in default in the performance or observance of any
covenant, agreement or condition of the Notes; and
(iii) the holder of this Note shall have received, in
connection therewith, an opinion of counsel for the Corporation (or
other counsel reasonably satisfactory to the holder) in form and
substance satisfactory to the holder, to the effect that any such
consolidation, merger, sale or conveyance and any such assumption
complies with the provisions of this paragraph (a).
Following the consummation of such merger, sale, conveyance or
other disposition, the Corporation will, upon the written request of the holder
of any Note, provide such holder with a copy of the agreement or agreements
pursuant to which such consolidation, merger, sale, conveyance or other
disposition was effected as promptly as possible.
(b) Restricted Payments. The Corporation shall not and
shall cause each of its subsidiaries not to (i) declare or pay any dividend on,
or authorize or make any distribution in respect of, shares of any class of its
or their stock (except dividends or distributions payable in shares of its
stock and except for dividends paid by direct or indirect wholly-owned
subsidiaries), or (ii) authorize or make any purchase, redemption or
acquisition for value of, any shares of any class of its their stock.
(c) Restrictions on Senior Subordinated Debt. The
Corporation shall not incur, and shall cause its subsidiaries not to incur,
directly or indirectly, any Debt (as defined below) which is senior in right of
payment to the Senior Subordinated Notes and is subordinate or junior in any
respect in right of payment to any other Debt. As used herein, "Debt" of a
person means at any date, without duplication, whether or not contingent, (i)
all obligations for borrowed money of such person, (ii) all obligations of such
person evidenced by bonds, debentures, notes, letters of credit or similar
instruments, (iii) all obligations of such person to pay the deferred purchase
price of property or services, except accounts payable and other liabilities
arising in the ordinary course of business, (iv) all reimbursement obligations
of such person, (v) all obligations of such person as lessee under capital
leases, (vi) all debt of others secured by a lien on any asset of such person
and (vii) any Debt of others guaranteed by such person.
(d) Disposition of Assets Not in the Ordinary Course. In
the event the Corporation or any subsidiary sells, transfers, assigns or
otherwise disposes of any asset not in the ordinary course of business, the
Corporation shall, or cause such subsidiary to, (i) use the proceeds of such
disposition to repay any Debt which is senior in right of payment to the Notes,
(ii) reinvest such proceeds in the Corporation or any wholly-owned subsidiary
of the Corporation, or (iii) prepay the Senior Subordinated Notes.
(e) Limitation on Payment Restrictions Affecting
Subsidiaries. The Corporation shall not, and shall not permit any subsidiary
of the Corporation to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction which by its terms
expressly restricts the ability of any such subsidiary to (i) pay dividends or
make any other distributions on such subsidiary's capital stock or pay any Debt
owed to the corporation or any subsidiary of the Corporation, (ii) make any
loans or advances to the Corporation or any subsidiary of the Corporation or
(iii) transfer any of its property or assets to the Corporation or any
subsidiary of the Corporation, except for any restrictions existing under
agreements in effect at the time of, or entered into concurrently with, the
issuance of this Note, including the restrictions contained in the Credit
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Agreement (as defined below), to the extent that such restrictions are set
forth in such agreement as in effect on the date of the issuance of this Note.
As used herein, "Credit Agreement" means that certain Credit Agreement between
Transamerica Business Credit Corporation (the "Bank"), the Corporation and the
Subsidiaries dated August ___, 1995.
14. Modification by Holders; Waiver. The Corporation and
the Subsidiaries may, with the written consent of the holders of not less than
66 2/3% in principal amount of the Notes then outstanding, modify the terms and
provisions of the Notes or the rights of the holders of the Notes or the
obligations of the Corporation and the Subsidiaries thereunder, and the
observance by the Corporation and the Subsidiaries of any term or provision of
the Notes may be waived with the written consent of the holders of not less
than 66 2/3% in principal amount of the Notes then outstanding; provided,
however, that no such modification or waiver shall:
(a) change the maturity of any Note or reduce the
principal amount thereof or reduce the rate or extend the time of
payment of interest thereon or reduce the amount or change the time of
payment of premium payable on any prepayment thereof without the
consent of the holder of each Note so affected; or
(b) give any Note any preference over any other Note; or
(c) reduce the applicable aforesaid percentages of Notes,
the consent of the holders of which is required for any such
modification.
Any such modification or waiver shall apply equally to all the
holders of the Notes and shall be binding upon them, upon each future holder of
any Note and upon the Corporation and the Subsidiaries, whether or not such
Note shall have been marked to indicate such modification or waiver, but any
Note issued thereafter shall bear a notation referring to any such modification
or waiver. Promptly after obtaining the written consent of the holders as
herein provided, the Corporation shall transmit a copy of such modification or
waiver to all the holders of the Notes at the time outstanding.
15. Events of Default; Acceleration. If any one or more
of the following events, herein called Events of Default, shall occur, for any
reason whatsoever, and whether such occurrence shall, on the part of the
Corporation or any Subsidiary, be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of a court of competent jurisdiction or any order, rule or
regulation of any administrative or other governmental authority and such Event
of Default shall be continuing:
(a) default shall be made in the payment of the principal
of any Note or the premium thereon, if any, when and as the same shall
become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise and such default shall
continue for a period of five days; or
(b) default shall be made in the payment of any
installment of interest on any Note according to its terms when and as
the same shall become due and payable and such default shall continue
for a period of ten days; or
(c) default or breach shall be or shall have been made in
the due observance or performance of any representation, covenant,
condition or agreement on the part of the Corporation or the
Subsidiaries to be observed or performed pursuant to the Purchase
Agreement or the terms hereof and such default shall continue for 15
days after written notice thereof, specifying such default and
requesting that the same be remedied, shall have been given to the
Corporation by the holder or holders of at least 25% of the principal
amount of the Notes then outstanding (the Corporation to give
forthwith
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to all other holders of Notes at the time outstanding written notice
of the receipt of such notice specifying the default referred to
therein); or
(d) the entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Corporation or
any subsidiary in an involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Corporation or any
subsidiary or for any substantial part of any of their respective
property, or ordering the winding-up or liquidation of any of their
affairs and the continuance of any such decree or order unstayed and
in effect for a period of 30 consecutive days; or
(e) the commencement by the Corporation or any subsidiary
of a voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar laws, or the consent by
the Corporation or any subsidiary to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Corporation or any
subsidiary or for any substantial part of any of their respective
property, or the making by the Corporation or any subsidiary of any
assignment for the benefit of creditors, or the failure of the
Corporation or any subsidiary generally to pay its debts as such debts
become due, or the taking of corporate action by the Corporation or
any subsidiary in furtherance of or which might reasonably be expected
to result in any of the foregoing; or
(f) (i) failure to make any payment in respect of any
Debt of the Corporation or its subsidiaries having an aggregate
principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than $50,000 when due (whether
by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto; or
(ii) failure by the Corporation or its subsidiaries to perform or
observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating
to any such Debt referred to in clause (i) above, and such failure
continues after the applicable grace or notice period, if any,
specified in the document relating thereto if the effect of such
failure, event or condition is to cause, or to permit the holder or
holders of such Debt or beneficiary or beneficiaries of such Debt (or
a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause such Debt to be declared to be due and
payable prior to its stated maturity; or
(g) final judgment for the payment of money in excess
$50,000 shall be rendered against the Corporation or any subsidiary
and the same shall remain undischarged for a period of 30 days during
which execution shall not be effectively stayed;
(h) a Change of Control (as defined below) shall have
occurred;
then, the holder or holders of at least 25% in aggregate principal amount of
the Notes at the time outstanding may, at its or their option, by written
notice to the Corporation and the Subsidiaries, declare all the Notes to be,
and all the Notes shall thereupon be and become, forthwith due and payable
together with interest accrued thereon without presentment, demand, protest or
further notice of any kind, all of which are expressly waived to the extent
permitted by law; provided, however, that upon the occurrence of any of the
events specified in subsections (d) or (e) of this Section 15, all the Notes
shall thereupon be and become, forthwith due and payable together with interest
accrued thereon without any action required by the holders thereof whatsoever.
As used herein, "Change of Control" means (i) the Corporation merges or
consolidates with another corporation (other than the consolidation or merger
of a wholly- owned subsidiary with or into the Corporation or with or into any
other wholly-owned subsidiary, and other than a merger involving the
Corporation in which the holders of at least 51% of the outstanding Common
Stock, on a fully-diluted basis, immediately prior to such merger hold at least
51% of the outstanding capital stock of the surviving corporation in any such
merger or consolidation, on a
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fully-diluted basis, immediately after the merger); (ii) any "person" or
"group" (as such terms are used in Section 13(d) of the Exchange Act and the
regulations promulgated hereunder) is or becomes a beneficial owner, directly
or indirectly, of securities of the Corporation having a majority of the total
number of votes that may be cast for the election of directors of the
Corporation; (iii) the Corporation and its subsidiaries on a consolidated basis
sells all or substantially all of their consolidated assets; (iv) as the result
of, or in connection with, any cash tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any combination
of the foregoing transactions (a "Transaction"), the persons who were directors
of the Corporation before the Transaction cease to constitute a majority of the
Board of Directors of the Corporation or any successor to the Corporation; or
(v) any director is elected to the Corporation's Board of Directors without
being nominated thereto by a majority of the Corporation's Independent
Directors (as such term is defined in the Corporation's By-Laws as in effect on
the date hereof).
At any time after any declaration of acceleration has been
made as provided in this Section 15 (except as provided under subsections (d)
or (e) thereunder), the holders of at least 66 2/3% in principal amount of the
Notes then outstanding may, by notice to the Corporation, rescind such
declaration and its consequences, if (i) the Corporation and the Subsidiaries
have paid all overdue installments of interest on the Notes and all principal
(and premium, if any) that has become due otherwise than by such declaration of
acceleration; and (ii) all other defaults and Events of Default (other than
nonpayments of principal and interest that have become due solely by reason of
acceleration) shall have been remedied or cured or shall have been waived
pursuant to this paragraph; provided, however, that no such rescission shall
extend to or affect any subsequent default or Event of Default or impair any
right consequent thereon.
WITHOUT LIMITING THE FOREGOING, THE CORPORATION AND THE
SUBSIDIARIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS NOTE OR THE NOTES AND AGREES THAT ANY SUCH
PROCEEDING MAY, IF THE HOLDER SO ELECTS, BE BROUGHT AND ENFORCED IN THE SUPREME
COURT OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND THE CORPORATION AND THE SUBSIDIARIES HEREBY
WAIVE ANY OBJECTION TO JURISDICTION OR VENUE IN ANY SUCH PROCEEDING COMMENCED
IN SUCH COURT. THE CORPORATION AND THE SUBSIDIARIES FURTHER AGREE THAT ANY
PROCESS REQUIRED TO BE SERVED ON THEM FOR PURPOSES OF ANY SUCH PROCEEDING MAY
BE SERVED ON THEM, WITH THE SAME EFFECT AS PERSONAL SERVICE ON THEM WITHIN THE
STATE OF DELAWARE, BY REGISTERED MAIL ADDRESSED TO THEM AT THE OFFICE OR AGENCY
SET FORTH IN SECTION 22 FOR PURPOSES OF NOTICES HEREUNDER.
16. Suits for Enforcement. In case any one or more of
the Events of Default specified in Section 15 of this Note shall happen and be
continuing, the holder of this Note may proceed to protect and enforce its
rights by suit in equity, action at law and/or by other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Note or in aid of the exercise of any power granted in this Note, or may
proceed to enforce the payment of this Note or to enforce any other legal or
equitable right of the holder of this Note.
In case of any default under any Note, the Corporation and the
Subsidiaries, jointly and severally, will pay to the holder thereof such
amounts as shall be sufficient to cover the costs and expenses of such holder
due to said default, including, without limitation, collection costs and
reasonable attorneys' fees, to the extent actually incurred.
17. Remedies Cumulative. No remedy herein conferred upon
the holder of this Note is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
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<PAGE> 43
18. Remedies Not Waived. No course of dealing between
the Corporation, the Subsidiaries and the holders of this Note or any delay on
the part of the holder hereof in exercising any rights hereunder shall operate
as a waiver of any right of any holder of this Note.
19. Subordination. (a) The obligation of the Corporation
and the Subsidiaries to pay the principal of and interest on this Note, shall
be subordinate and junior in right of payment to the extent set forth in the
following paragraphs (i), (ii) and (iii) to all Senior Debt. As used herein,
"Senior Debt" means the principal of, premium, if any, and interest (including
post-petition interest at the contract rate in any bankruptcy, insolvency or
similar proceeding with respect to the Corporation) on, and other amounts
payable on or in connection with indebtedness for money borrowed by the
Corporation or the Subsidiaries, whether or not outstanding on the date of this
Note, from, of capital lease obligations payable to any bank or other financial
institution regularly engaged in the business of making loans or extending
credit; provided, that Senior Debt shall not include any such indebtedness or
capital lease obligations which (a) is guaranteed by any other entity or person
(other than a subsidiary of the Corporation); (b) is convertible into equity of
the Corporation or any subsidiary or which was purchased from the Corporation
or any subsidiary by such bank or financial institution along with capital
stock, warrants or other rights to receive an equity interest, profit
participation or similar rights in the Corporation or such subsidiary; or (c)
provides in any documentation evidencing such indebtedness or capital lease
obligation that such indebtedness or capital lease obligation is not superior
in right of payment to the Senior Subordinated Notes.
(i) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or any
receivership proceedings in connection therewith, relative to the
Corporation or its creditors or its property, and in the event of any
proceedings for voluntary liquidation, dissolution or other winding up
of the Corporation, whether or not involving insolvency or bankruptcy
proceedings, then all Senior Debt shall first be paid in full, before
any payment on account of principal or interest is made upon this
Note.
(ii) In any of the proceedings referred to in paragraph
(i) above, any payment or distribution of any kind or character,
whether in cash, property, stock or obligations which may be payable
or deliverable in respect of this Note shall be paid or delivered
directly to the holders of Senior Debt for application in payment
thereof, unless and until all Senior Debt shall have been paid in
full.
(iii) In the event (A) the Corporation shall default under any
Senior Debt obligation and the effect of such default is to accelerate
the maturity of such obligation, (B) the Corporation shall default
under any Senior Debt obligation and as a result thereof the holder
thereof shall cause such obligation to become due prior to the stated
maturity thereof, (C) the Corporation shall not pay a Senior Debt
obligation at maturity or (D) the Corporation shall not make any
payment of principal or interest under any document evidencing Senior
Debt when due, then upon the occurrence of (x) receipt by the holder
of this Note of written notice from the holder of such Senior Debt or
(y) if such event of default specified in clauses (A) through (D)
above results from the acceleration of the Senior Subordinated Notes,
the date of such acceleration, no such payment may be made by the
Corporation upon or in respect of the Notes for a period (the "Payment
Blockage Period") commencing on the earlier of the date of receipt of
such notice or the date of such acceleration and ending 179 days
thereafter (unless such Payment Blockage Period shall be terminated
earlier by written notice to the holder hereof from the holder of such
Senior Debt commencing the Payment Blockage Period). Notwithstanding
anything herein to the contrary, in no event shall a Payment Blockage
Period extend beyond 179 days from the date the payment on the Notes
was due. Not more than one Payment Blockage Period with respect to
this Note may be commenced during any period of 360 consecutive days.
For all purposes of this Section 19(a)(iii), no event of default which
existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to Senior Debt initiating such
Payment Blockage Period shall be, or be made, the basis for the
commencement of a second Payment Blockage Period by the holder of such
Senior Debt whether or not within a period of 360 consecutive days
unless such event of default shall have been cured or waived for a
period of not less than 30 consecutive days.
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<PAGE> 44
(b) Subject to the payment in full of all Senior Debt as
aforesaid, the holder of this Note shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of any kind or
character, whether in cash, property, stock or obligations, which may be
payable or deliverable to the holders of Senior Debt, until the principal of,
and interest on, the Senior Subordinated Notes shall be paid in full, and, as
between the Corporation, its creditors other than the holders of Senior Debt,
and the holders of this Note, no such payment or distribution made to the
holders of Senior Debt by virtue of this Section 19 which otherwise would have
been made to the holder of this Note shall be deemed a payment by the
Corporation on account of the Senior Debt, it being understood that the
provisions of this Section 19 are and are intended solely for the purposes of
defining the relative rights of the holder of this Note, on the one hand, and
the holders of the Senior Debt, on the other hand. Subject to the rights, if
any, under this Section 19 of holders of Senior Debt to receive cash, property,
stock or obligations otherwise payable or deliverable to the holder of this
Note, nothing herein shall either impair, as between the Corporation and the
holder of this Note, the obligation of the Corporation, which is unconditional
and absolute, to pay to the holder hereof the principal hereof and interest
hereon in accordance with its terms and the provisions of this Note or prevent
the holder of this Note from exercising all remedies otherwise permitted by
applicable law or hereunder upon default hereunder. The failure to make a
payment on account of principal or interest on the Notes by reason of any
provision of this Section 19 shall not be construed as preventing the
occurrence of an Event of Default under Section 15.
(c) Notwithstanding any provision contained herein to the
contrary, the indebtedness evidenced by this Note shall not (i) be subordinated
to claims of any trade creditors of the Corporation or (ii) be subordinated in
right of payment to the payment of any existing or future Debt of the
Corporation which is not Senior Debt; but rather shall rank equally with all
existing and future unsecured Debt of the Corporation except for such Debt as
may be subordinate thereto and as may be required by bankruptcy or other laws
affecting the rights of creditors generally.
20. Covenants Bind Successors and Assigns. All the
covenants, stipulations, promises and agreements in this Note contained by or
on behalf of the Corporation and the Subsidiaries shall bind their respective
successors and assigns, whether so expressed or not.
21. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
22. 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.
23. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by first class
registered mail, postage prepaid,
(a) if to the Corporation or the Subsidiaries, at:
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to the holder of this Note, to its address set
forth in the register maintained by the Corporation for the
registration of transfer and exchange of Notes.
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<PAGE> 45
IN WITNESS WHEREOF, each of the undersigned has caused this
Note to be signed in its corporate name by one of its officers thereunto duly
authorized and to be dated as of the day and year first above written.
TRANSCISCO INDUSTRIES, INC.
By
-----------------------------------
President
[Corporate Seal]
Attest:
- ----------------------------
Secretary
TRANSCISCO RAIL SERVICES COMPANY
By
-----------------------------------
President
[Corporate Seal]
Attest:
- ----------------------------
Secretary
TRANSCISCO LEASING COMPANY
By
-----------------------------------
President
[Corporate Seal]
Attest:
- ----------------------------
Secretary
TRANSCISCO TRADING COMPANY
By
-----------------------------------
President
[Corporate Seal]
Attest:
- ----------------------------
Secretary
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<PAGE> 46
EXHIBIT C
THIS WARRANT HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF THE HOLDER
THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS
THE RESALE OR OTHER DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
THIS DOCUMENT AND THE INDEBTEDNESS OR OTHER OBLIGATION DESCRIBED HEREIN OR
EVIDENCED HEREBY IS SUBORDINATED, IN THE MANNER AND TO THE EXTENT SET FORTH IN
A SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT"), DATED AS OF AUGUST
___, 1995, TO CERTAIN INDEBTEDNESS (INCLUDING INTEREST) AT ANY TIME OWED BY THE
BORROWER OR OBLIGOR UNDER THIS DOCUMENT TO TRANSAMERICA BUSINESS CREDIT
CORPORATION AND ITS SUCCESSORS AND ASSIGNS, AND EACH HOLDER OF THIS DOCUMENT,
BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE SUBORDINATION AGREEMENT.
WARRANT
TRANSCISCO INDUSTRIES, INC.
Stock Subscription Warrant
Warrant to Subscribe August ___, 1995
for [up to 1,000,000 shares]
Void After July 31, 2005
THIS CERTIFIES that, for value received, [FURMAN SELZ SBIC,
L.P., a Delaware limited partnership or James Dowling ("Dowling")], or its
registered assigns, is entitled to subscribe for and purchase from TRANSCISCO
INDUSTRIES, INC., a Delaware corporation (hereinafter called the
"Corporation"), at the price of $1.50 per share (such price as from time to
time adjusted as hereinafter provided being hereinafter called the "Warrant
Price"), at any time prior to July 31, 2005, up to [1,000,000] (subject to
adjustment as hereinafter provided) fully paid and nonassessable shares of
Common Stock, par value $.01 per share, of the Corporation (hereinafter called
the "Common Stock"), subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. This Warrant was issued pursuant to a
certain Note and Warrant Purchase Agreement, dated as of August ___, 1995 (the
"Purchase Agreement"), among the Corporation, certain subsidiaries of the
Corporation, Furman Selz SBIC, L.P. ("FS") and James Dowling ("Dowling"), and
the rights and benefits contained therein shall inure to the benefit of all
subsequent holders of this Warrant. The Warrants issued pursuant to the
Purchase Agreement and any warrant or warrants subsequently issued upon
exchange or transfer thereof are hereinafter collectively called the
"Warrants".
Section 1. Exercise of Warrant.
(a) Method of Exercise. The rights represented by this
Warrant may be exercised by the holder hereof, in whole at any time or from
time to time in part, but not as to a fractional share of Common Stock, by the
surrender of this Warrant (properly endorsed) at the office of the Corporation
as it may designate by notice in writing to the holder hereof at the address of
such holder appearing on the books of the Corporation, and as further provided
below in this Section l:
(i) Cash Exercise. By payment to the Corporation of the
Warrant Price in cash or by certified or official bank check, for each
share being purchased;
(ii) Surrender of Notes. By surrender to the Corporation
for cancellation of A Notes or B Notes (as each such term is defined
in the Purchase Agreement), or of any portion of an A Note or a B
Note, for which credit shall be given toward the Warrant Price for
each share being acquired on a dollar-for-dollar basis with reference
to the principal amount cancelled;
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<PAGE> 47
(iii) Net Issue Exercise. By an election to receive shares
the aggregate fair market value of which as of the date of exercise is
equal to the fair market value of this Warrant (or the portion thereof
being cancelled) on such date, in which event the Corporation, upon
receipt of notice of such election, shall issue to the holder hereof a
number of shares of the Corporation's Common Stock equal to (A) the
number of shares of Common Stock acquirable upon exercise of all or
any portion of this Warrant being cancelled, as at such date,
multiplied by (B) the balance remaining after deducting (x) the
Warrant Price, as in effect on such date, from (y) the fair market
value of one share of the Corporation's Common Stock as at such date
and dividing the result by (C) the fair market value of one share of
the Corporation's Common Stock as at such date; or
(iv) Combined Payment Method. By satisfaction of the
Warrant Price for each share being acquired in any combination of two
or more of the methods described in clauses (i), (ii) and (iii) above.
(b) Definition of Fair Market Value. For the purposes of
this Section 1, "fair market value" shall mean, as to any security, as follows:
if that security is listed or admitted to trading on one or more national
securities exchanges, the average of the last reported sales prices per share
regular way or, in case no such reported sales takes place on any such day, the
average of the last reported bid and asked prices per share regular way, in
either case on the principal national securities exchange on which that
security is listed or admitted to trading, for the 30 trading days immediately
preceding the date upon which the fair market value is determined (the
"Determination Date"); if that security is not listed or admitted to trading on
a national securities exchange but is quoted by the NASDAQ Stock Market
("NASDAQ"), the average of the last reported sales prices per share regular way
or, in case no reported sale takes place on any such day or the last reported
sales prices are not then quoted by NASDAQ, the average for each such day of
the last reported bid and asked prices per share, for the 30 trading days
immediately preceding the Determination Date as furnished by the National
Quotation Bureau Incorporated or any similar successor organization; and if
that security is not listed or admitted to trading on a national securities
exchange or quoted by NASDAQ or any other nationally recognized quotation
service, the "fair market value" shall be the fair value thereof determined
jointly by the Corporation and the registered holders of Warrants outstanding
representing a majority of the shares of Common Stock issuable upon exercise of
the Warrants; provided, however, that if such parties are unable to reach
agreement within 60 days after such determination becomes necessary, the "fair
market value" shall equal the fair market value of all outstanding shares of
Common Stock of the Corporation divided by the number of shares of Common Stock
outstanding, such fair market value to be determined in good faith by an
independent investment banking firm selected jointly by the Corporation and the
registered holders of Warrants outstanding representing a majority of the
shares of Common Stock issuable upon exercise of the Warrants or, if that
selection cannot be made within 15 days, by an independent investment banking
firm selected by the American Arbitration Association in accordance with its
rules. The fees and expenses of any such investment banking firm shall be
shared and paid equally by the Corporation and the holder(s) of such Warrants
who have required valuation. Anything in this paragraph (b) to the contrary
notwithstanding, the fair market value of this Warrant or any portion thereof
as of any Determination Date shall be equal to (i) the fair market value of the
shares of Common Stock issuable upon exercise of this Warrant (or such portion
thereof), (determined in accordance with the foregoing provisions of this
paragraph (b)); minus (ii) the aggregate Warrant Exercise Price of the Warrant
(or such portion thereof).
(c) Delivery of Certificates, Etc. In the event of any
exercise of the rights represented by this Warrant, a certificate or
certificates for the shares of Common Stock so purchased, registered in the
name of the holder, shall be delivered to the holder hereof within a reasonable
time, not exceeding ten days, after the rights represented by this Warrant
shall have been so exercised; and, unless this Warrant has expired, a new
Warrant representing the number of shares (except a remaining fractional
share), if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof within such time. The
person in whose name any certificate for shares of Common Stock is issued upon
exercise of this Warrant shall for all purposes be deemed to have become the
holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price and any applicable taxes was made,
except that, if
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<PAGE> 48
the date of such surrender and payment is a date on which the stock transfer
books of the Corporation are closed, such person shall be deemed to have become
the holder of such shares at the close of business on the next succeeding date
on which the stock transfer books are open.
Section 2. Adjustment of Number of Shares. Upon each
adjustment of the Warrant Price as provided in Section 3, the holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant Price
resulting from such adjustment, the number of shares (calculated to the nearest
tenth of a share) obtained by multiplying the Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Warrant Price resulting from such adjustment.
Section 3. Adjustment of Price Upon Issuance of Common Stock.
If and whenever the Corporation shall issue or sell any shares of its Common
Stock for a consideration per share less than the fair market value for such
shares at the time of such issue or sale, then, forthwith upon such issue or
sale the Warrant Price shall be adjusted (calculated to the nearest $.01)
determined by multiplying the Warrant Price by a fraction, the numerator of
which is the amount equal to the sum of (a) the number of shares of Common
Stock outstanding immediately prior to such issue or sale multiplied by the
fair market value for one share of Common Stock, and (b) the consideration, if
any, received by the Corporation upon such issue or sale, and the denominator
of which is the amount equal to the total number of shares of Common Stock
outstanding immediately after such issue or sale multiplied by the fair market
value of one share of Common Stock. No adjustments of the Warrant Price,
however, shall be made in an amount less than $.01 per share, but any such
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to $.01 per share or more.
For purposes of this Section 3, the following paragraphs (a)
to (o), inclusive, shall also be applicable:
(a) Issuance of Rights or Options. In case at any time
the Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common Stock
(such rights or options being herein called "Options", and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities (determined by dividing (i)
the total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case
of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion
or exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such Options) shall be less than the fair market
value of a share of Common Stock at the time of the granting of such
Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have
been issued for such price per share as of the date of granting of
such Options and thereafter shall be deemed to be outstanding. Except
as otherwise provided in paragraph (c), no adjustment of the Warrant
Price shall be made upon the actual issue of such Common Stock or of
such Convertible Securities upon exercise of such Options or upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
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(b) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange
(determined by dividing (i) the total amount received or receivable by
the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange of all such Convertible Securities) shall be
less than the fair market value of a share of Common Stock at the time
of such issue or sale, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (i) except as otherwise provided in
paragraph (c) below, no adjustment of the Warrant Price shall be made
upon the actual issue of such Common Stock upon conversion or exchange
of such Convertible Securities, and (ii) if any such issue or sale of
such Convertible Securities is made upon exercise of any Option to
purchase any such Convertible Securities for which adjustments of the
Warrant Price have been or are to be made pursuant to other provisions
of this Section 3, no further adjustment of the Warrant Price shall be
made by reason of such issue or sale.
(c) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase
price provided for in any Option referred to in paragraph (a), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in paragraph (a) or
(b), or the rate at which any Convertible Securities referred to in
paragraph (a) or (b) are convertible into or exchangeable for Common
Stock shall change at any time (other than under or by reason of
provisions designed to protect against dilution), the Warrant Price in
effect at the time of such event shall forthwith be readjusted to the
Warrant Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted, issued or sold; and
on the expiration of any such Option or the termination of any such
right to convert or exchange such Convertible Securities, the Warrant
Price then in effect hereunder shall forthwith be increased to the
Warrant Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Security, to
the extent outstanding immediately prior to such expiration or
termination, never been issued, and the Common Stock issuable
thereunder shall no longer be deemed to be outstanding.
If the purchase price provided for in any such Option referred to in
paragraph (a) or the rate at which any Convertible Securities referred
to in paragraph (a) or (b) are convertible into or exchangeable for
Common Stock, shall be reduced at any time under or by reason of
provisions with respect thereto designed to protect against dilution,
then in case of the delivery of Common Stock upon the exercise of any
such Option or upon conversion or exchange of any such Convertible
Security, the Warrant Price then in effect hereunder shall forthwith
be adjusted to such respective amount as would have been obtained had
such Option or Convertible Security never been issued as to such
Common Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered as aforesaid, but only if as a result
of such adjustment the Warrant Price then in effect hereunder is
thereby reduced.
(d) Stock Dividends. In case the Corporation shall
declare a dividend or make any other distribution upon any stock of
the Corporation payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold without consideration.
(e) Consideration for Stock. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor, without deduction
therefrom of any
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expenses incurred or any underwriting commissions or concessions paid
or allowed by the Corporation in connection therewith. In case any
shares of Common Stock, Options or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation shall be
deemed to be the fair value of such consideration as determined by the
Board of Directors of the Corporation, without deduction of any
expenses incurred or any underwriting commissions or concessions paid
or allowed by the Corporation in connection therewith. The amount of
consideration deemed to be received by the Corporation pursuant to the
foregoing provisions of this paragraph (e) upon any issuance and/or
sale, pursuant to an established compensation plan of the Corporation,
to directors, officers or employees of the Corporation in connection
with their employment of shares of Common Stock, Options or
Convertible Securities, shall be increased by the amount of any tax
benefit realized by the Corporation as a result of such issuance
and/or sale, the amount of such tax benefit being the amount by which
the Federal and/or State income or other tax liability of the
Corporation shall be reduced by reason of any deduction or credit in
respect of such issuance and/or sale. In case any Options shall be
issued in connection with the issue and sale of other securities of
the Corporation, together comprising one integral transaction in which
no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued without
consideration. In case any shares of Common Stock, Options or
Convertible Securities shall be issued in connection with any merger
or consolidation in which the Corporation is the surviving
corporation, the amount of consideration therefor shall be deemed to
be the fair value as determined by the Board of Directors of the
Corporation of such portion of the assets and business of the
non-surviving corporation as such Board shall determine to be
attributable to such Common Stock, Options or Convertible Securities,
as the case may be. In the event of any consolidation or merger of
the Corporation in which the Corporation is not the surviving
corporation or in the event of any sale of all or substantially all of
the assets of the Corporation for stock or other securities of any
corporation, the Corporation shall be deemed to have issued a number
of shares of its Common Stock for stock or securities of the other
corporation computed on the basis of the actual exchange ratio on
which the transaction was predicated and for a consideration equal to
the fair market value on the date of such transaction of such stock or
securities of the other corporation, and if any such calculation
results in adjustment of the Warrant Price, the determination of the
number of shares of Common Stock receivable under this Warrant
immediately prior to such merger, consolidation or sale, for purposes
of paragraph (i), shall be made after giving effect to such adjustment
of the Warrant Price.
(f) Record Date. In case the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities, or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
(g) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Corporation, and the disposition of
any such shares shall be considered an issue or sale of Common Stock
for the purposes of this Section 3.
(h) Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Warrant Price in
effect immediately prior to such subdivision shall be proportionately
reduced, and conversely, in case the outstanding shares of Common
Stock of the Corporation shall be combined into a smaller number of
shares, the Warrant Price in effect immediately prior to such
combination shall be proportionately increased.
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(i) Reorganization, Reclassification, Consolidation,
Merger or Sale. If any capital reorganization or reclassification of
the capital stock of the Corporation or any consolidation or merger of
the Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be
effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate
provisions shall be made whereby each holder of the Warrants shall
thereafter have the right to receive upon the basis and upon the terms
and conditions specified herein and in lieu of the shares of Common
Stock of the Corporation immediately theretofore receivable upon the
exercise of such Warrant or Warrants, such shares of stock, securities
or assets (including cash) as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock
equal to the number of shares of such stock immediately theretofore so
receivable had such reorganization, reclassification, consolidation,
merger or sale not taken place, and in any such case appropriate
provision shall be made with respect to the rights and interests of
such holder to the end that the provisions hereof (including without
limitation provisions for adjustments of the Warrant Price) shall
thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the
exercise of such exercise rights (including an immediate adjustment,
by reason of such reorganization or reclassification, of the Warrant
Price to the value for the Common stock reflected by the terms of such
reorganization or reclassification if the value so reflected is less
than the Warrant Price in effect immediately prior to such
reorganization or reclassification). In the event of a merger or
consolidation of the Corporation as a result of which a greater or
lesser number of shares of common stock of the surviving corporation
are issuable to holders of Common Stock of the Corporation outstanding
immediately prior to such merger or consolidation, the Warrant Price
in effect immediately prior to such merger or consolidation shall be
adjusted in the same manner as though there were a subdivision or
combination of the outstanding shares of Common Stock of the
Corporation. The Corporation will not effect any such consolidation,
merger or any sale of all or substantially all of its assets of
properties, unless prior to the consummation thereof the successor
corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets
shall assume by written instrument executed and mailed or delivered to
each holder of the Warrants at the last address of such holder
appearing on the books of the Corporation, the obligation to deliver
to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled
to receive.
(j) Notice of Adjustment. Upon any adjustment of the
Warrant Price, then and in each such case, the Corporation shall give
written notice thereof, by first class mail, postage prepaid,
addressed to each holder of the Warrants at the address of such holder
as shown on the books of the Corporation, which notice shall state the
Warrant Price resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the facts upon which
such calculation is based.
(k) Certain Events. If any event occurs as to which in
the opinion of the Board of Directors of the Corporation the other
provisions of this Section 3 are not strictly applicable or if
strictly applicable would not fairly protect the exercise rights of
this Warrant, in accordance with the essential intent and principles
of such provisions to protect against dilution, then such Board of
Directors shall in good faith make an adjustment in the application of
such provisions, in accordance with such essential intent and
principles, so as to protect such exercise rights as aforesaid.
(l) Stock to Be Reserved. The Corporation will at all
times reserve and keep available out of its authorized Common Stock or
its treasury shares, solely for the purpose of issue upon the exercise
of this Warrant as herein provided, such number of shares of Common
Stock as shall then be issuable upon the exercise of this Warrant.
The Corporation covenants that all shares of Common Stock which shall
be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect
to the issue thereof, and, without limiting the generality of the
foregoing, the Corporation covenants that it will from time to time
take all such action
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as may be requisite to assure that the par value per share of the
Common Stock is at all times equal to or less than the effective
Warrant Price. The Corporation will take all such action as may be
necessary to assure that all such shares of Common Stock may be so
issued without violation of any applicable law or regulation, or of
any requirements of any national securities exchange upon which the
Common Stock of the Corporation may be listed. The Corporation will
not take any action which results in any adjustment of the Warrant
Price if the total number of shares of Common Stock issued and
issuable after such action upon exercise of this Warrant would exceed
the total number of shares of Common Stock then authorized by the
Corporation's Articles of Incorporation. The Corporation has not
granted and will not grant any right of first refusal with respect to
shares issuable upon exercise of this Warrant, and there are no
preemptive rights associated with such shares.
(m) Issue Tax. The issuance of certificates for shares
of Common Stock upon exercise of the Warrants shall be made without
charge to the holders of such Warrants for any issuance tax in respect
thereof provided that the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of
any holder of the Warrants.
(n) Closing of Books. The Corporation will at no time
close its transfer books against the transfer of the shares of Common
Stock issued or issuable upon the exercise of this Warrant in any
manner which interferes with the timely exercise of this Warrant.
(o) Definition of Common Stock. As used herein the term
"Common Stock" shall mean and include the Common Stock, par value $.01
per share, of the Corporation as authorized on the date hereof and
also any capital stock of any class of the Corporation hereinafter
authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
provided, however, that the shares purchasable pursuant to this
Warrant shall include only shares designated as Common Stock, par
value $.01 per share, of the Corporation on the date hereof or shares
of any class or classes resulting from any reclassification or
reclassifications thereof which are not limited to any such fixed sum
or percentage and are not subject to redemption by the Corporation
and, in case at any time there shall be more than one such resulting
class, the shares of each class then so issuable shall be
substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
Section 4. Notices of Record Dates. In the event of
(i) any taking by the Corporation of a record of the
holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution (other than cash dividends out of earned surplus), or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive
any other right, or
(ii) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the
Corporation or any transfer of all or substantially all the assets of
the Corporation to or consolidation or merger of the Corporation with
or into any other corporation, or
(iii) any voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation,
then and in each such event the Corporation will give notice to the holder of
this Warrant specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right and stating the amount
and character of such dividend, distribution or right, and (ii) the date on
which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take
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place, and the time, if any is to be fixed, as of which the holders of record
of Common Stock will be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be given at least 20
days and not more than 90 days prior to the date therein specified, and such
notice shall state that the action in question or the record date is subject to
the effectiveness of a registration statement under the Securities Act of 1933,
as amended (the "Securities Act") or to a favorable vote of stockholders, if
either is required.
Section 5. Registration Rights. The rights of the holder
hereof with respect to the registration under the Securities Act of 1933, as
amended, of the shares of Common Stock issuable upon the exercise of this
Warrant are set forth in the Registration Rights Agreement, dated as of August
___, 1995, between the Corporation, FS and Dowling.
Section 6. No Stockholder Rights or Liabilities. This
Warrant shall not entitle the holder hereof to any voting rights or other
rights as a stockholder of the Corporation. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the Warrant Price
or as a stockholder of the Corporation, whether such liability is asserted by
the Corporation or by creditors of the Corporation.
Section 7. Investment Representation and Legend. The holder,
by acceptance of the Warrant, represents and warrants to the Corporation that
it is acquiring the Warrant and the shares of Common Stock (or other
securities) issuable upon the exercise hereof for investment purposes only and
not with a view towards the resale or other distribution thereof and agrees
that the Corporation may affix upon this Warrant the following legend:
"This Warrant has been issued in reliance upon the
representation of the holder that it has been acquired for investment
purposes and not with a view towards the resale or other distribution
thereof. Neither this Warrant nor the shares issuable upon the
exercise of this Warrant have been registered under the Securities Act
of 1933, as amended."
The holder, by acceptance of this Warrant, further agrees that the Corporation
may affix the following legend to certificates for shares of Common Stock
issued upon exercise of this Warrant:
"The securities represented by this certificate have been
issued in reliance upon the representation of the holder that they
have been acquired for investment and not with a view toward the
resale or other distribution thereof, and have not been registered
under the Securities Act of 1933, as amended. Neither the securities
evidenced hereby, nor any interest therein, may be offered, sold,
transferred, encumbered or otherwise disposed of unless either (i)
there is an effective registration statement under said Act relating
thereto or (ii) the Corporation has received an opinion of counsel,
reasonably satisfactory in form and substance to the Corporation,
stating that such registration is not required."
Section 8. Lost, Stolen, Mutilated or Destroyed Warrant. If
this Warrant is lost, stolen, mutilated or destroyed, the Corporation may, on
such terms as to indemnity or otherwise as it may in its discretion reasonably
impose (which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an
original contractual obligation of the Corporation, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time
enforceable by anyone.
Section 9. Notices. All notices, requests and other
communications required or permitted to be given or delivered hereunder shall
be in writing, and shall be delivered, or shall be sent by certified or
registered mail, postage prepaid and addressed, if to the holder to such holder
at the address shown on such
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holder's Warrant or Warrant Shares or at such other address as shall have been
furnished to the Corporation by notice from such holder. All notices, requests
and other communications required or permitted to be given or delivered
hereunder shall be in writing, and shall be delivered, or shall be sent by
certified or registered mail, postage prepaid and addressed to the Corporation
at such address as shall have been furnished to the holder by notice from the
Corporation.
IN WITNESS WHEREOF, Transcisco Industries, Inc. has executed
this Warrant on and as of the day and year first above written.
TRANSCISCO INDUSTRIES, INC.
By
-----------------------------------
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SUBSCRIPTION AGREEMENT
To:
Dated:
The undersigned, pursuant to the provisions set forth in the
within Warrant, hereby agrees to subscribe for and purchase __________ shares
of Common Stock covered by such Warrant, and makes payment herewith in full
therefor (at the price per share provided by such Warrant [in cash] [by
surrender of A Notes or B Notes (as each such term is defined in the Note and
Warrant Purchase Agreement, dated as of August ___, 1995 between the
Corporation, Furman Selz SBIC, L.P. and James Dowling] [as provided in Section
1(a)(iii) of such Warrant].
Signature
-----------------------------
---------------------------------------
Address
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EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, (the "Agreement") dated as of
August ___, 1995, by and between TRANSCISCO INDUSTRIES, INC., a Delaware
corporation (the "Company") and FURMAN SELZ SBIC, L.P., a Delaware limited
partnership ("Furman Selz"), and JAMES DOWLING ("Dowling" and collectively with
Furman Selz, the "Purchasers").
WHEREAS, the parties hereto have entered into a Note and
Warrant Purchase Agreement dated as of even date herewith; and
WHEREAS, pursuant to such agreement, Purchasers have agreed to
acquire Warrants (as defined below) from the Company; and
WHEREAS, it is a condition precedent to the Purchasers'
obligations under such agreement that the parties hereto enter into this
Agreement; and
WHEREAS the Company wishes to grant registration rights for
shares of the Company's stock acquirable by the Purchasers pursuant to the
exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereby agree as follows:
1. Definitions
As used herein, the following terms have the following
respective meanings:
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
"Covered Shares" means the Registrable Securities of the
Selling Holders included in a registration statement pursuant to the terms
hereof.
"Demand Registration" has the meaning given to that term in
Section 2 hereof.
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended.
"Holders" means, collectively, the holders of Registrable
Securities granted registration rights pursuant to this Agreement. A person
shall be deemed to be a Holder whenever person owns Registrable Securities or
has the right to acquire Registrable Securities, whether or not such
acquisition has actually been effected and disregarding any legal restrictions
upon the exercise of such right.
"Indemnified Party" has the meaning given to that term in
Section 6 hereof.
"Indemnifying Party" has the meaning given to that term in
Section 6 hereof.
"Majority Selling Holders" means the Selling Holders holding a
majority of the Covered Shares.
"Purchase Agreement" means the Note and Warrant Purchase
Agreement, dated as of August ___, 1995 among the Company, the Purchasers,
Transcisco Rail Services Company, Transcisco Leasing Company and Transcisco
Trading Company.
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<PAGE> 57
"Registrable Securities" means the Warrant Shares and any
Common Stock issued or issuable with respect to the Warrant Shares by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. Any
Registrable Security will cease to be a Registrable Security when (i) a
registration statement covering such Registrable Security has been declared
effective by the SEC and it has been disposed of pursuant to such effective
registration statement, (ii) it is sold under circumstances in which all of the
applicable conditions of Rule 144 are met, or (iii) it has been otherwise
transferred, the Company has delivered a new certificate or other evidence of
ownership for it not bearing any restrictive legend citing the absence of
registration thereof and it may be resold without subsequent registration under
the Securities Act.
"Registration Expenses" has the meaning given to that term in
Section 12 hereof.
"Requesting Holder" has the meaning given to that term in
Section 2 hereof.
"SEC" means the U.S Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement in accordance with the terms
hereof.
"Warrants" mean those Warrants issued by the Company pursuant
to the Purchase Agreement.
"Warrant Shares" mean shares of Common Stock issued or
issuable upon exercise of the Warrants.
All capitalized terms used herein that are not otherwise
defined herein shall have the meanings ascribed thereto in the Purchase
Agreement.
2. Demand Registration.
(a) Subject to the provisions hereof, at any time on or after
the date hereof, the Holder or Holders of a majority (by number of shares of
Warrant Shares) of the Registrable Securities (the "Requesting Holders") may
make a written request to the Company for registration with the SEC under and
in accordance with the provisions of the Securities Act of all or part of such
Requesting Holders' Registrable Securities (a "Demand Registration"); provided,
that (x) the Company need not effect the Demand Registration unless the sale of
Registrable Securities held by the Requesting Holders pursuant to the Demand
Registration will result in receipt by such Requesting Holders of at least
$1,000,000 in aggregate net proceeds, and (y) the Company may defer the Demand
Registration for a single period not to exceed 180 days, if the Board of
Directors of the Company determines in the exercise of its reasonable judgment
that due to a pending or contemplated acquisition, disposition or public
offering it would be inadvisable to effect the Demand Registration at such
time. Within 10 days after receipt of the request for a Demand Registration,
the Company will serve written notice (the "Notice") of such registration
request to all Holders of Registrable Securities. Subject to Section 2(d)
below, the Company will include in any Demand Registration all Registrable
Securities of the Holders for which the Company has received written requests
for inclusion therein from such Holder within 15 business days after the
receipt by the applicable Holder of the Notice. All requests for the sale of
Registrable Securities in any Demand Registration made pursuant to this Section
2(a) will specify the aggregate number of the Registrable Securities to be
registered.
(b) Unless the Demand Registration is effected by an offering
on a continuous or delayed basis under Rule 415 or any successor rule under the
Securities Act, a Demand Registration shall be effected pursuant to a firm
commitment underwritten registration and offering, the managing underwriter of
which shall
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be a nationally-recognized investment banking firm named by the Majority
Selling Holders and reasonably acceptable to the Company. The Company agrees
that the firm of Furman Selz Inc. is acceptable to the Company.
(c) The Holders shall be entitled to no more than one Demand
Registration, and the expenses (including the reasonable fees and expenses of
one counsel for the Holders in accordance with Section 12) thereof shall be
borne by the Company and Holders as set forth in Section 12. A Demand
Registration will not be counted as a Demand Registration hereunder until such
Demand Registration has been declared effective (and Section (a)(3) of Rule
430A under the Securities Act shall have been complied with, if applicable) and
maintained continuously effective for a period (i) in the case of an
underwritten offering, of at least six months or such shorter period until all
Registrable Securities included therein have been sold in accordance with such
Demand Registration or (ii) in the case of an offering on a continuous or
delayed basis, such period until all Registrable Securities included therein
have been sold in accordance with such Demand Registration; provided, however,
if a Demand Registration is withdrawn prior to effectiveness thereof at the
request of the holders of a majority of the Registrable Securities included
therein due to reasons other than material adverse changes in the Company's
condition, financial or otherwise, since the written request for the Demand
Registration was delivered to the Company, the Demand Registration will be
counted hereunder unless such Holders agree to pay the expenses incurred by the
Company in connection therewith.
(d) If the managing underwriter of a Demand Registration
advises the Company in writing (with a copy to the Requesting Holders and each
other Holder requesting inclusion of Registrable Securities therein) that, in
its opinion, the number of Registrable Securities requested to be included in
the Demand Registration exceeds the number which can be sold in such offering,
then the Company will include in such registration only the number of
Registrable Securities recommended by the managing underwriter, selected in the
following order of priority: (i) first, the Registrable Securities that the
Requesting Holders have requested to be included in such registration (pro rata
according to the Registrable Securities proposed to be included in the
registration by such Requesting Holders); (ii) second, Registrable Securities
that other Holders have requested to be included in such registration (pro rata
according to the Registrable Securities proposed to be included in the
registration by such other Holders); and (iii) third, securities held by all
other parties.
3. PiggyBack Registration
(a) Subject to the provisions of this Section 3, if the
Company at any time proposes to register any of its equity securities (as
defined in the Exchange Act) under the Securities Act, whether or not for sale
for its own account (other than pursuant to Section 2 hereof), and the
registration form to be used may be used for the registration of Registrable
Securities, the Company each such time will give written notice of such
proposed filing to the Holders as soon as practicable (but in no event less
than ten days before the anticipated filing date), and such notice shall offer
the Holder the opportunity to include such number of Registrable Securities in
the registration as the Holder may request.
(b) The Company shall use its best efforts to cause the
managing underwriter or underwriters of a proposed underwritten offering to
permit the Registrable Securities requested 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. Notwithstanding the foregoing, if
the managing underwriter of such registration advises the Company in writing
(with a copy to the Requesting Holders and each other Holder requesting
inclusion of Registrable Securities therein) that, in its opinion, the number
of Registrable Securities requested to be included in the registration exceeds
the number which can be sold in such offering, then the Company will include in
such registration only the number of Registrable Securities recommended by the
managing underwriter, selected in the following order of priority: (i) first,
the securities that the Company intends to be included in such registration;
(ii) second, Registrable Securities that Holders have requested to be included
in such registration (pro rata according to the Registrable Securities proposed
to be included in the registration by such Holders); and (iii) third,
securities held by all other parties.
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4. Holdback Agreements
(a) Restrictions on Public Sale by Holder of Registrable
Securities. Each Holder agrees not to effect any public sale or distribution
of Common Stock, including a sale pursuant to Rule 144, during the 10 days
prior to, and during the 90-day period beginning on, the effective date of any
registration statement filed pursuant hereto (except as part of such
registration), if and to the extent requested by the Company in the case of a
non-underwritten public offering or if and to the extent requested by the
managing underwriter or underwriters in the case of an underwritten public
offering.
(b) Restrictions on Public Sale by the Company and Others.
The Company agrees (i) not to effect any public sale or distribution of any
Common Stock (other than pursuant to a registration statement on Form S-8 or
any successor form), during the 14 days before, and during the 90-day period
beginning on, the effective date of any registration statement filed hereunder
(except as part of such registration statement); and (ii) that any agreement
entered into after the date of this Agreement pursuant to which the Company
issues or agrees to issue any privately placed securities shall contain a
provision under which the holders of such securities agree not to effect any
public sale or distribution of any such securities during the periods described
in (i) above, in each case including a sale pursuant to Rule 144; provided,
however, that the provisions of this paragraph (b) shall not prevent the
conversion or exchange of any securities pursuant to their terms into or for
other securities.
5. Registration Procedures.
Whenever the Holders have requested that any Registrable
Securities be registered pursuant to Section 2 or Section 3 hereof, the Company
will use its best efforts to effect the registration of such Registrable
Securities in accordance with the intended method of disposition thereof as
promptly as practicable, and in connection with any such request, the Company
will as expeditiously as possible (provided that nothing contained herein
prohibits the Company from abandoning a registration in which Holders have
requested to participate pursuant to Section 3 hereof):
(a) prepare and file with the SEC a registration statement
(but in any event within 90 days after the end of the period within which
requests may be given to the Company) on any form for which the Company then
qualifies or which counsel for the Company deems appropriate and which form is
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 (i) before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company will furnish
to one counsel selected by the Majority Selling Holders copies of all such
documents proposed to be filed, which documents will be subject to the review
of such counsel, and (ii) that after the filing of the registration statement,
the Company will promptly notify each Selling Holder of any stop order issued
or, to the knowledge of the Company, threatened by the SEC and take all
reasonable actions required to prevent the entry of such stop order or to
remove it if entered;
(b) prepare and file with the SEC such amendments and
supplements to the registration statement and the prospectus used in connection
therewith as may be necessary to keep the registration statement effective for
a period which will terminate when all Covered Shares have been sold (but not
before the expiration of the 90-day period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, if applicable, and not longer than nine
months after the effective date of such registration statement) and comply with
the provisions of the Securities Act with respect to the disposition of all
Covered Shares during such period in accordance with the intended methods of
disposition by the Selling Holders thereof set forth in the registration
statement;
(c) furnish to each Selling Holder, before filing the
registration statement, if requested, copies of the registration statement as
proposed to be filed, and thereafter furnish to such Selling Holder such number
of copies of the registration statement, each amendment and supplement thereto
(in each case including all
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exhibits thereto), the prospectus included in the registration statement
(including each preliminary prospectus) and such other document as such Selling
Holder may reasonably request in order to facilitate the disposition of the
Covered Shares owned by such Selling Holder;
(d) use its best efforts to register or qualify the Covered
Shares under such other securities or blue sky laws of such jurisdictions in
the United States as any Selling Holder reasonably (in light of such Selling
Holder's intended plan of distribution) requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition in such jurisdictions of its
Covered Shares; provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (d), (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
(e) use its best efforts to cause the Covered Shares to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable Selling Holders to consummate the disposition of the Covered Shares
owned by such Selling Holders;
(f) notify each Selling Holder, at any time when a prospectus
relating to Covered Shares is required to be delivered under the Securities
Act, of the occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Covered Shares, 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 Selling Holder any such supplement or amendment;
(g) enter into customary agreements (including an
underwriting agreement in customary form if the distribution of the Covered
Shares is otherwise to be made in an underwritten offering) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Covered Shares;
(h) make available for inspection by any Selling Holder, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
Selling Holder or underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as are reasonably necessary to enable them to
exercise due diligence, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such Inspectors
in connection with the registration statement. Each Selling Holder further
agrees that it will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to the Company and allow the
Company at its expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential;
(i) in the event an offering of Registrable Securities 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 managing underwriter reasonably requests;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to
its security holders, as soon as reasonably practicable, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and covering a
period of twelve months, beginning within three months after the effective date
of the registration statement;
(k) use its best efforts to cause all Covered Shares to be
listed on each securities exchange on which similar securities issued by the
Company are then listed; and
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<PAGE> 61
(l) provide a transfer agent and registrar for all of the
Covered Shares not later than the effective date of such registration
statement.
In any underwritten public offering contemplated by Section 2 or Section 3, the
Holders shall be entitled to sell their Warrants to the underwriters for
exercise and sale of the Warrant Shares issued upon the exercise thereof.
6. Indemnification.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Selling Holder, its officers, directors,
employees and agents, and each Person, if any, who controls any Selling Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the Covered
Shares, in any amendment or supplement thereto, in any preliminary prospectus,
or arising out of or based upon any omission or any alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of, or are based upon, any such
untrue statement or omission or allegation thereof based upon information
furnished in writing to the Company by such Selling Holder or on such Selling
Holder's behalf expressly for use therein.
(b) Indemnification by the Selling Holders. Each Selling
Holder agrees to indemnify and hold harmless the Company, its directors and
officers and each party, if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to each Selling
Holder, but only with respect to information furnished in writing by such
Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus.
(c) Conduct of Indemnification Proceedings. If any action or
proceeding (including any governmental investigation) is brought or asserted
against any party entitled to indemnification under clauses (a) or (b) above
(an "Indemnified Party") in respect of which indemnity may be sought from any
party who has agreed to provide such indemnification (an "Indemnifying Party"),
the Indemnifying Party will assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party, and
will assume the payment of all expenses. Such Indemnified Party will 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 will be at the
expense of such Indemnified Party unless (i) the Indemnifying Party has agreed
to pay such fees and expenses or (ii) the named parties to any such action or
proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party has been advised
by counsel that there is a conflict of interest on the part of counsel employed
by the Indemnifying Party to represent such Indemnified Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party will not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party; it being understood,
however, that the Indemnifying Party will not, in connection with any one such
action or proceeding or separate but substantially similar or related actions
or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for all such Indemnified Parties). The Indemnifying Party will not be
liable for any settlement of any such action or proceeding effected without its
written consent, but if settled with its written consent, or if there is a
final judgment for the plaintiff in any such action or proceeding, the
Indemnifying Party will indemnify and hold harmless such Indemnified Parties
from and against any loss or liability (to the extent stated above) by reason
of such settlement or judgment.
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<PAGE> 62
7. Contribution
If for any reason the indemnification provided for in the
preceding Sections 6(a) and 6(b) is unavailable to an Indemnified Party as
contemplated by those sections, then the Indemnifying Party will contribute to
the amount paid or payable by the Indemnified Party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the Indemnified Party and the
Indemnifying Party, but also the relative fault of the Indemnified Party and
the Indemnifying Party, as well as any other relevant equitable considerations,
provided that no Selling Holder will be required to contribute in an amount
greater than the difference between the net proceeds received by such Selling
Holder with respect to the sale of any Registrable Securities and all amounts
already contributed by such Selling Holder with respect to such claims.
8. Participation in Underwritten Registrations
No Holder may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell it's securities on the basis
provided in any underwriting arrangements approved by the parties entitled
hereunder to approve such arrangements; and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement. Notwithstanding the previous sentence, no
Holder shall be required to make any representations or warranties to, or make
any agreements with the Company or any underwriter other than representations,
warranties or agreements regarding such Holder or such Holder's intended method
of distribution.
9. Rule 144
The Company covenants that it will file any reports required
to be filed by it under the Securities Act and the Exchange Act so as to enable
Holders to sell Warrant Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144. Upon the request
of any Holder, the Company will deliver to such Holder a written statement as
to whether it has complied with such requirements.
10. Information
The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the distribution
of the Registrable Securities as it may from time to time reasonably request
and such other information as may be legally required or reasonably requested
in connection with such registration.
11. Amended or Supplemented Prospectus
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
5(f) hereof, such Selling Holder will forthwith discontinue disposition of any
Covered Shares pursuant to the registration statement covering such Covered
Shares until such Selling Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5(f) hereof, and, if so directed by
the Company, each Selling Holder will deliver to the Company all copies, other
than permanent file copies then in such Selling Holder's possession, all
prospectuses covering such Covered Shares at the time of receipt of such
notice, and shall not effect any transaction with respect to any Covered Shares
except pursuant to the supplemented or amended prospectus. In the event the
Company gives such notice, the Company will extend the period during which such
registration statement will be maintained effective (including the period
referred to in Section 5(f) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to Section 5(f)
hereof to the date when the Company makes available to each Selling Holder a
prospectus supplemented or amended to conform with the requirements of Section
5(f) hereof.
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12. Registration Expenses
In connection with any registration statement filed pursuant
to Section 2 or Section 3 hereof, the Company will pay all registration
expenses (the "Registration Expenses"), including but not limited to: (i) all
registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws, subject to the provisions of Section 5(d),
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Covered Shares), (iii) printing expenses, (iv)
internal expenses of the Company (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) the fees and expenses incurred in connection with the listing of
the Covered Shares, (vi) fees and disbursements of counsel for the Company and
customary fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 5(i) hereof),
(vii) the fees and expenses of any special experts retained by the Company in
connection with such registration, and (viii) reasonable fees and expenses of
one law firm (designated by the Majority Selling Holders and reasonably
acceptable to the Company) acting as counsel for the Selling Holders in
connection with the registration hereunder; provided, however, the Company will
not have any obligation to pay any underwriting fees, discounts or commissions
attributable to the sale of Covered Shares (which will be the obligation of the
Selling Holders) or, except as otherwise provided in clause (viii) above, any
out-of-pocket expenses of the Selling Holders (or any agents who manage their
accounts) or fees and disbursements of any counsel for any underwriter in any
underwritten offering.
13. Registration Rights.
The Company agrees that it will not enter into any agreement
or arrangements which would grant any party a right to participate in any
registration that is superior to or in contravention of the rights to
participate set forth in this Agreement.
14. Parties in Interest.
(a) This Agreement is for the benefit of any Holder
irrespective of whether such Holder is a signatory to this Agreement.
(b) All covenants and agreements contained in this
Agreement by or on behalf of either party hereto shall bind and inure to the
benefit of the respective successors and assigns of such party hereto, whether
so expressed or not, including subsequent Holders of Registrable Securities.
15. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be mailed by first-class registered mail, postage
prepaid, or sent by recognized courier service addressed as follows:
(a) if to the Company, at
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
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<PAGE> 64
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Park Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to Furman Selz at:
230 Park Avenue
New York, NY 10169
Attention: Brian P. Friedman
if to Dowling at:
620 Fir Court
Norwood, NJ 07648
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Carmen J. Romano, Esq.
(c) if to any Holder, to such Holder at its address
appearing on the records of the Company;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
16. LAW GOVERNING.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
17. Entire Agreement.
This Agreement constitutes the entire Agreement of the parties with
respect to the subject mater hereof and may not be modified or amended except
in writing.
18. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together constitute one and
the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.
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TRANSCISCO INDUSTRIES, INC.
---------------------------------
By:
FURMAN SELZ SBIC, L.P.
By: FURMAN SELZ INVESTMENTS INC.,
its General Partner
By:
-----------------------------
---------------------------------
James Dowling
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<PAGE> 1
Exhibit 5
(214) 740-8522
August 12, 1996
Trinity Industries, Inc.
2525 Stemmons Freeway
Dallas, Texas 75207
Gentlemen:
We have acted as counsel for Trinity Industries, Inc. (the "Company")
in connection with the preparation and filing with the Securities and Exchange
Commission of a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Registration Statement"), relating to 188,400 shares of
the Company's Common Stock, par value $1.00 per share (the "Shares"), that may
be offered from time to time by any or all of the Selling Stockholders named
therein.
In this connection, we have examined the following documents:
(i) Copy, certified by the Secretary of State of the State of
Delaware, of the Certificate of Incorporation of the Company,
as amended;
(ii) Copy of the By-laws and Minutes of the meetings of the
directors and stockholders from the inception of the Company
to the date hereof;
(iii) The Merger Agreement, dated June 17, 1996, by and between the
Company, Trinity Y and Transcisco (the "Merger Agreement");
and
(iv) The Registration Statement and all Exhibits thereto.
We have also examined such other documents as we have deemed necessary
to the expression of the opinions contained herein.
<PAGE> 2
Trinity Industries, Inc.
August 12, 1996
Page 2
Based upon the foregoing, we are of the opinion that:
(1) The Company has been duly organized and is in good standing
under the laws of the State of Delaware;
(2) The issuance by the Company pursuant to the Merger Agreement
of the Company's Shares has been duly and validly authorized
by necessary corporate action; and
(3) The Company's Shares, upon delivery of such Shares being
offered from time to time by any or all of the Selling
Stockholders, will have been validly issued and will be fully
paid and non-assessable.
We hereby consent to the use of our name in the Registration Statement
and in the related Prospectus and to the filing of a copy of this opinion as
Exhibit 5 to the Registration Statement.
Very truly yours,
LOCKE PURNELL RAIN HARRELL
(A Professional Corporation)
By: /s/ Charles C. Reeder
---------------------------------
Charles C. Reeder
CCR/amw
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Trinity Industries,
Inc. for the registration of 188,400 shares of its common stock and to the
incorporation by reference therein of our report dated May 9, 1996, with
respect to the consolidated financial statements and schedule of Trinity
Industries, Inc. included in its Annual Report (Form 10-K) for the year ended
March 31, 1996, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
DALLAS, TEXAS
AUGUST 8, 1996
