Exhibit 10.1
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PSC INC.
SPECTRASCAN, INC.
$30,000,000 11.25% Senior Subordinated Notes of SpectraScan, Inc.
due June 30, 2006
Warrants for 975,000 Shares of Common Stock, $0.01 par value,
of PSC Inc. (subject to adjustment)
______________
SECURITIES PURCHASE AGREEMENT
______________
July 12, 1996
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TABLE OF CONTENTS
Page
1. Authorization of Securities; Other Purchasers; etc...........-1-
2. Sale and Purchase of Securities..............................-2-
3. Closing......................................................-2-
4. Conditions to Closing........................................-3-
4.1. Representations and Warranties Correct.................-3-
4.2. Performance; No Default................................-3-
4.3. Related Transactions...................................-3-
4.4. Compliance Certificate.................................-5-
4.5. Note Guarantees........................................-5-
4.6. Opinions of Counsel for the Companies and the Sellers..-5-
4.7. Opinion of Your Special Counsel........................-5-
4.8. Certain Additional Documents to be Delivered at or Prior
to the Closing.........................................-5-
4.9. Sale of Securities to Other Purchasers.................-6-
4.10. Legal Investment; Certificate..........................-6-
4.11. Sale and Purchase Not Forbidden by Law.................-6-
4.12. Payment of Closing Fee and Transactions Costs..........-6-
4.13. Proceedings and Documents..............................-6-
5. Representations and Warranties...............................-6-
5.1. Organization, Standing, etc. of the Companies..........-6-
5.2. Subsidiaries...........................................-7-
5.3. Qualification..........................................-7-
5.4. Business, etc..........................................-7-
5.5. Shares; Stockholders...................................-8-
5.6. Financial Statements...................................-9-
5.7. Changes; Solvency, etc.................................-9-
5.8. Tax Returns and Payments..............................-10-
5.9. Funded Debt, Current Debt, Liens, Investments and
Transactions with Affiliates..........................-10-
5.10. Title to Properties; Liens; Leases....................-11-
5.11. Litigation, etc.......................................-11-
5.12. Valid and Binding Obligations; Compliance with Other
Instruments, Borrowing Restrictions, etc..............-11-
5.13. ERISA.................................................-12-
5.14. Consents, etc.........................................-13-
5.15. Proprietary Rights; Licenses..........................-14-
5.16. Offer of Securities; Investment Bankers...............-14-
5.17. Government Regulation.................................-14-
5.18. Labor Relations; Suppliers, Distributors and Customers-14-
5.19. Voting Provisions.....................................-15-
5.20. Disclosure............................................-15-
6. Use of Proceeds.............................................-15-
7. Financial Statements and Information........................-16-
8. Inspection..................................................-20-
9. Prepayment of Notes.........................................-20-
9.1. Required Annual Prepayment Without Premium of Notes...-20-
9.2. Optional Prepayment With Premium of Notes.............-20-
9.3. Optional Prepayment With Premium of the Notes with the
Proceeds of Certain Public Offerings..................-20-
9.4. Allocation of Partial Prepayments of Notes............-21-
9.5. Notice of Optional Prepayments of Notes...............-21-
9.6. Maturity; Accrued Interest; Surrender, etc. of Notes..-21-
9.7. Purchase of Notes.....................................-21-
9.8. Payment on Non-Business Days..........................-22-
9.9. Application of Notes in Satisfaction of Exercise Price of
Warrants..............................................-22-
10. Subordination of Notes......................................-22-
10.1. Certain Definitions...................................-22-
10.2. Subordinated Indebtedness Subordinated to Superior
Indebtedness; No Amendments...........................-23-
10.3. Dissolution, Liquidation, Reorganization, etc.........-24-
10.4. No Payments With Respect to Subordinated Indebtedness
in Certain Circumstances..............................-25-
10.5. Payments and Distributions Received...................-27-
10.6. Subrogation...........................................-27-
10.7. Notice................................................-28-
10.8. Subordination Not Affected, etc.......................-28-
10.9. Obligations Unimpaired................................-28-
10.10. Holders of Subordinated Indebtedness Entitled to Assume
Payments Not Prohibited in Absence of Notice..........-29-
10.11. Limitation on Right of Action........................-29-
11. Registration, etc...........................................-30-
11.1. Shelf Registration....................................-30-
11.2. Incidental Registration...............................-31-
11.3. Permitted Registration................................-32-
11.4. Registration Procedures...............................-33-
11.5. Indemnification.......................................-33-
11.6. Restrictions on Other Agreements......................-34-
12. Put Rights..................................................-35-
12.1. Put Rights............................................-35-
13. Board Inspection Rights.....................................-37-
14. Covenants of the Companies..................................-37-
14.1. Books of Record and Account; Reserves.................-37-
14.2. Payment of Taxes; Existence; Maintenance of Properties;
Compliance with Laws; Lines of Business; Proprietary
Rights................................................-38-
14.3. Insurance.............................................-39-
14.4. Limitation on Discount or Sale of Receivables.........-39-
14.5. Limitation on Funded Debt.............................-39-
14.6. Limitation on Restricted Payments; Payments on Seller
Notes.................................................-40-
14.7. Certain Financial Covenants...........................-41-
14.8. Limitation on Investments.............................-43-
14.9. Limitation on Liens...................................-44-
14.10. Limitation on Transactions with Affiliates...........-45-
14.11. Limitation on Rental Obligations; Capital Expenditures;
Hedge Agreements......................................-45-
14.12. Limitation on Issuance of Shares of Subsidiaries.....-46-
14.13. Limitation on Subsidiary's Consolidation or Merger...-46-
14.14. Limitation on Holding Company's Consolidation or Merger-47-
14.15. Limitation on Disposition of Property................-47-
14.16. Modification of Certain Documents, Agreements and
Instruments...........................................-48-
14.17. Further Assurances;..................................-49-
14.18. Additional Subsidiaries..............................-49-
14.19 Limitation on Tax Consolidation.......................-49-
15. Definitions.................................................-49-
15.1. Definitions of Capitalized Terms......................-49-
15.2. Other Definitions.....................................-63-
15.3. Accounting Terms and Principles; Laws.................-64-
16. Remedies....................................................-64-
16.1. Events of Default Defined; Acceleration of Maturity...-64-
16.2. Suits for Enforcement, etc............................-69-
16.3. Remedies Cumulative...................................-70-
16.4. Remedies Not Waived...................................-70-
16.5. Application of Payments...............................-70-
17. Registration, Transfer and Exchange of Securities...........-70-
18. Replacement of Securities...................................-71-
19. Amendment and Waiver........................................-71-
20. Method of Payment of Securities.............................-72-
21. Expenses; Indemnity.........................................-72-
22. Taxes.......................................................-73-
23. Communications..............................................-73-
24. Survival of Agreements, Representations and Warranties, etc.-74-
25. Successors and Assigns; Rights of Other Holders.............-74-
26. Purchase for Investment; ERISA..............................-74-
27. Governing Law; Jurisdiction; Waiver of Jury Trial...........-76-
28. Rule 144A...................................................-77-
29. Miscellaneous...............................................-77-
Schedule I Schedule of Purchasers
Exhibit 1(a)(i) Form of Note
Exhibit 1(a)(ii) Form of Note Guarantee
Exhibit 1(b) Form of Warrant
Exhibit 3 Wire Instructions
Exhibit 4.3(a) Form of Seller Notes
Exhibit 4.6(a) Opinion of Boylan, Brown, Code, Fowler, Vidgor and
Wilson, LLP
Exhibit 4.6(b) Opinion of Fried, Frank, Harris, Shriver & Jacobson
Exhibit 4.6(c) Opinion of Dechert Price & Rhoads
Exhibit 4.7 Opinion of Choate, Hall & Stewart
Exhibit 4.8 Additional Documents to be Delivered at or Prior
to the Closing
Exhibit 5.2 Subsidiaries
Exhibit 5.5(a) Shares; Stockholders
Exhibit 5.5(b) Other Securities; Commitments; Preemptive and Registration
Rights
Exhibit 5.6(a) Financial Statements
Exhibit 5.6(b) Projections
Exhibit 5.6(c) Pro Forma Unaudited Balance Sheet
Exhibit 5.7 Restricted Payments
Exhibit 5.8 Taxes
Exhibit 5.9 Funded Debt, Current Debt, Liens, Investments,
Transactions with Affiliates and Leases
Exhibit 5.11(a) Litigation
Exhibit 5.11(b) Other Litigation
Exhibit 5.15 Proprietary Rights and Licenses
Exhibit 5.19 Voting Provisions
Exhibit 6 Use of Proceeds
Exhibit 7(c)(v) Information as to New Subsidiaries
Exhibit 15.1 Pro Forma EBITDA
PSC INC.
SPECTRASCAN, INC.
675 Basket Road
Webster, New York 14580
July 12, 1996
THE EQUITABLE LIFE ASSURANE SOCIETY
OF THE UNITED STATES (1)
c/o Alliance Capital Management L.P.
135 West 50th Street, 6th Floor
New York, New York 10020
Ladies and Gentlemen:
PSC INC., a New York corporation (the "Holding Company"), and SPECTRASCAN,
INC., a Delaware corporation (formerly named Spectra-Physics Scanning Systems,
Inc., the surviving corporation of the Merger hereinafter referred to) and a
Wholly-Owned Subsidiary of the Holding Company (the "Operating Company") (the
Holding Company and the Operating Company are sometimes collectively referred to
herein as the "Companies" and each as a "Company"), jointly and severally agree
with you as follows. Certain capitalized terms used herein are defined in
section 15.
1. Authorization of Securities; Other Purchasers; etc.
(a) The Operating Company has authorized the issue and sale of its
11.25% Senior Subordinated Notes due June 30, 2006 (herein, together with
any notes issued in exchange therefor or replacement thereof, called the
"Notes") in the aggregate principal amount of $30,000,000. The Notes are to
be substantially in the form of Exhibit 1(a)(i) attached hereto. Interest
is payable on the Notes, quarterly in arrears on each March 31, June 30,
September 30 and December 31, commencing September 30, 1996, and at
maturity. In no event shall the amount paid or agreed to be paid by the
Operating Company as interest and premium on any Note exceed the highest
lawful rate permissible under any law applicable thereto. The Notes are to
be guaranteed by the Holding Company and by each Subsidiary of the Holding
Company (other than any Foreign Subsidiary and the Operating Company),
including any Person which hereafter becomes a Subsidiary of the Holding
(1) There will be separate but identical Securities Purchase Agreements
addressed to each of the Other Purchasers.
Company (other than any Foreign Subsidiary), pursuant to a guarantee
substantially in the form of Exhibit 1(a)(ii) attached hereto (each, a
"Note Guarantee"; collectively, the "Note Guarantees").
(b) The Holding Company has authorized the issue and sale of its
warrants evidencing rights to purchase 975,000 shares of Common Stock
(subject to adjustment) (herein, together with any warrants issued in
exchange therefor or replacement thereof, called the "Warrants"). The
Warrants are to be exercisable on or after July 12, 1997, are to terminate
at the close of business on July 12, 2006 and are to be substantially in
the form of Exhibit 1(b) attached hereto.
(c) The Securities are to be issued under this Agreement and separate
Securities Purchase Agreements (the "Other Securities Purchase Agreements")
identical herewith (except as to the name and address of each of the other
purchasers) being entered into concurrently by the Companies with each of
the other purchasers (the "Other Purchasers") named in Schedule I attached
hereto. The issue of Securities to you and the issues of Securities to each
of the Other Purchasers are separate transactions, and you shall not be
liable or responsible for the acts or defaults of the Other Purchasers.
2. Sale and Purchase of Securities. The Companies will issue and sell to you
and, subject to the terms and conditions hereof and in reliance upon the
representations and warranties of the Companies contained herein and in the
other Operative Documents, you will purchase from the Companies, at the Closing
specified in section 3, such Securities as are specified on that portion of
Schedule I attached hereto as is applicable to you. The aggregate purchase price
of the Securities shall be $30,000,000, which shall be allocated (a) $29,400,000
to the Notes and (b) $600,000 to the Warrants. The Companies, the Other
Purchasers and you agree that the values ascribed to the Securities (which
values shall be used by the Companies, the Other Purchasers and you, as well as
any subsequent holder of any of the Securities, for all purposes, including the
preparation of tax returns) shall be determined in accordance with the
foregoing.
3. Closing. The closing of the sale and purchase of the Securities hereunder
(the "Closing") shall take place at the office of Messrs. Choate, Hall &
Stewart, Exchange Place, 53 State Street, Boston, Massachusetts 02109, on July
12, 1996 or such other date to which you may agree (the "Closing Date"). The
Closing shall occur not later than 11:00 A.M. Boston time (your reinvestment
deadline) on the Closing Date. At the Closing, the Companies will deliver to you
the Securities to be purchased by you at the Closing against payment of the
purchase price thereof to (or for the benefit of) the Companies in immediately
available funds in accordance with the wire instructions set forth on Exhibit 3
attached hereto. Delivery of the Securities to be purchased by you at the
Closing shall be made in the form of one or more Notes and Warrants, in such
denominations and registered in such names as are specified on Schedule I
attached hereto, and in each case dated and, in the case of each Note, bearing
interest from, the Closing Date. If at the Closing the Companies shall fail to
tender the Securities to be delivered to you thereat as provided herein, or if
at the Closing any of the conditions specified in section 4 shall not have been
fulfilled to your reasonable satisfaction, you shall, at your election, be
relieved of all further obligations under this Agreement, without thereby
waiving any other rights you may have by reason of such failure or such
non-fulfillment.
4. Conditions to Closing. Your obligation to purchase and pay for the Securities
to be purchased by you hereunder at the Closing is subject to the fulfillment to
your satisfaction, prior to or at the Closing, of the following conditions:
4.1. Representations and Warranties Correct. The representations and
warranties made by the Companies herein and in the other Operative Documents
shall have been correct when made and shall be correct at and as of the time of
the Closing (after giving effect to the transactions consummated at the
Closing).
4.2. Performance; No Default. The Companies shall have performed all
agreements and complied with all conditions contained herein and in the other
Operative Documents required to be performed or complied with by them prior to
or at the Closing, and at the time of the Closing, no Default or Event of
Default shall exist and no condition shall exist which has resulted in, or could
reasonably be expected to result in, a Material Adverse Change.
4.3. Related Transactions.
(a) Pursuant to and in accordance with the terms of the Asset and
Stock Purchase Agreement dated May 20, 1996 by and among the Holding
Company, Spectra-Physics, Inc., a Delaware corporation ("Spectra-Physics"),
and Spectra-Physics Holding, S.A., a French corporation ("Spectra SA" and
collectively with Spectra-Physics, the "Sellers") (such Asset and Stock
Purchase Agreement, as amended, modified and supplemented from time to time
in accordance with section 14.16 of this Agreement, the "Acquisition
Agreement"), (i) Spectra-Physics shall have sold to PSC Acquisition, Inc.,
a Delaware corporation and a Wholly-Owned Subsidiary of the Holding Company
("Acquisition Corp.") all of the issued and outstanding shares of capital
stock (and all securities convertible into or exercisable or exchangeable
for such capital stock) of Spectra-Physics Scanning Systems, Inc., a
Delaware corporation ("Scanning") (such shares, the "Scanning Shares") and
the US Assets (as defined in the Acquisition Agreement), (ii) Spectra SA
shall have sold to the Holding Company all of the issued and outstanding
shares of capital stock of TXCOM S.A., a French corporation ("TxCom"),
owned by Spectra S.A. (the "TxCom Shares") (being 7,235 shares of common
stock representing 72% of the issued and outstanding capital stock of
TxCom) and shall have assigned to the Holding Company the TxCom Contracts
(as defined in the Acquisition Agreement), and (iii) the Seller
Subsidiaries (as defined in the Acquisition Agreement) shall have sold the
International Assets (as defined in the Acquisition Agreement), subject
to the Assumed International Liabilities (as defined in the Acquisition
Agreement), to certain Wholly-Owned Subsidiaries of the Holding Company
(the purchase and sale of securities and assets pursuant to the Acquisition
Agreement are referred to herein collectively as the "Stock/Asset
Purchase"). Pursuant to and in accordance with the Plan and Agreement of
Merger of even date by and between Acquisition Corp. and Scanning (the
"Merger Agreement") (the Acquisition Agreement, the Merger Agreement and
the other agreements, documents and instruments executed in connection
therewith, all as amended, modified and supplemented from time to time in
accordance with section 14.16 of this Agreement, are sometimes collectively
referred to as the "Acquisition Documents"), Acquisition Corp. shall have
been merged with and into Scanning and the Operating Company shall be the
surviving corporation, all as contemplated by the Merger Agreement (the
"Merger") (the Stock/Asset Purchase and the Merger are collectively
referred to as the "Acquisition"). The Certificate of Merger related to the
Merger shall have been filed with all necessary governmental authorities,
including, without limitation, the Secretary of State of the State of
Delaware, and you shall have received evidence of same reasonably
satisfactory to you. No condition under any of the Acquisition Documents
for the benefit of either of the Companies shall have been waived. The
aggregate purchase price to be paid to the Sellers under the Acquisition
Agreement in respect of the Scanning Shares, the US Assets, the TxCom
Shares and the International Assets, shall not exceed (i) $120,000,000
payable in cash at the Closing (subject to adjustment as provided in
sections 1.4 and 1.6 of the Acquisition Agreement), (ii) the issuance of
$5,000,000 aggregate principal amount of Subordinated Installment
Promissory Notes of the Operating Company due 2001, which notes shall be in
the form of Exhibit 4.3(a) attached hereto and subordinated to the Notes on
terms and conditions satisfactory to you (such notes, as amended, modified
and supplemented from time to time in accordance with section 14.16 of this
Agreement, the "Seller Notes"), (iii) shares of Common Stock of the Holding
Company having an aggregate fair market value (determined in accordance
with the Acquisition Agreement) equal to $10,000,000, and (iv) the
assumption of the Assumed International Liabilities. Each of the
Acquisition Documents shall be in form and substance reasonably
satisfactory to you in all material respects.
(b) The capitalization of each Company shall be in all respects
satisfactory to you. Without limiting the generality of the foregoing,
after giving effect to the transactions contemplated hereby, the Companies
shall not have any Funded Debt or Current Debt other than that evidenced by
the Notes and that which is specified on Exhibit 5.9 attached hereto.
(c) Pursuant to and in accordance with the terms of the Credit
Agreement dated as of the date hereof (such agreement, as amended, modified
and supplemented from time to time in compliance with section 14.16 of this
Agreement, the "Bank Credit Agreement") among Acquisition Corp., the
Holding Company, as guarantor, and the initial lenders named therein
(together with their respective successors and assigns under the Bank
Credit Agreement, the "Banks") and Fleet Bank, as initial issuing bank and
administrative agent (the Bank Credit Agreement and the other agreements,
documents and instruments executed in connection therewith or pursuant
thereto (including any Hedge Agreements (as defined in the Bank Credit
Agreement)), all as amended, modified and supplemented from time to time in
compliance with section 14.16 of this Agreement, are sometimes collectively
referred to as the "Bank Credit Documents"), the Operating Company shall
have established a senior revolving credit facility and shall have borrowed
not less than $80,000,000 under two separate term loans maturing June 30,
2001 and December 31, 2002, respectively. The Banks' commitment under such
revolving credit facility shall be $20,000,000, and shall expire on June
30, 2001. The aggregate amount of the Operating Company's unused borrowing
availability immediately following the Closing under such revolving credit
facility shall be not less than $5,000,000. The collateral for such
revolving credit facility and term loans shall consist of all assets of the
Companies and their Subsidiaries (other than any Foreign Subsidiary).
4.4. Compliance Certificate. At the Closing, you shall have received an
Officers' Certificate, dated the Closing Date, certifying that the conditions
specified in sections 4.1 and 4.2 have been fulfilled.
4.5. Note Guarantees. At the Closing, the Holding Company and each of the
Subsidiaries of the Holding Company (other than any Foreign Subsidiary and the
Operating Company) shall have executed and delivered to you the Note Guarantees.
4.6. Opinions of Counsel for the Companies and the Sellers. At the Closing,
you shall have received (a) an opinion, dated the Closing Date, from Messrs.
Boylan, Brown, Code, Fowler, Vidgor and Wilson, LLP, counsel for the Companies,
substantially in the form of Exhibit 4.6(a) attached hereto, (b) an opinion,
dated the Closing Date, from Messrs. Fried, Frank, Harris, Shriver & Jacobson,
intellectual property counsel to the Companies, substantially in the form of
Exhibit 4.6(b) attached hereto, and (c) a letter from Messrs. Dechert Price &
Rhoads, counsel to the Sellers, authorizing you to rely on their opinion
delivered pursuant to the Acquisition Agreement.
4.7. Opinion of Your Special Counsel. At the Closing, you shall have
received an opinion, dated the Closing Date, from your special counsel, Messrs.
Choate, Hall & Stewart, substantially in the form of Exhibit 4.7 attached
hereto.
4.8. Certain Additional Documents to be Delivered at or Prior to the
Closing. You shall have received the items specified on Exhibit 4.8 attached
hereto, each of which shall be satisfactory to you in all material respects.
4.9. Sale of Securities to Other Purchasers. At the Closing, the Companies
shall sell to the Other Purchasers the Securities to be purchased at the Closing
by the Other Purchasers pursuant to the Other Securities Purchase Agreements and
shall receive payment in full of the purchase price thereof.
4.10. Legal Investment; Certificate. Your purchase of the Securities to be
issued pursuant hereto shall be permitted under the laws and regulations of any
jurisdiction to which you are subject (without resort to any provision of any
such law permitting limited investments by you without restriction as to the
character of the particular investment), and you shall, if requested by you,
have received an Officers' Certificate, dated the Closing Date, certifying as to
such matters as you may request to enable you to determine whether your purchase
is so permitted.
4.11. Sale and Purchase Not Forbidden by Law. The offer, issue, sale and
delivery by the Companies of the Securities to be issued pursuant hereto and
your purchase of such Securities at the Closing shall not be prohibited by and
shall not subject you to any tax, penalty, liability or other onerous condition
under or pursuant to any law, statute, rule or regulation.
4.12. Payment of Closing Fee and Transactions Costs. The Companies shall
have paid in immediately available funds (a) a non-refundable closing fee to you
and the Other Purchasers in the aggregate amount of $300,000 (1.0% of the
aggregate principal amount of the Notes), which shall be allocated among you and
the Other Purchasers in proportion to the aggregate principal amount of Notes to
be purchased by you and the Other Purchasers, and (b) all fees, expenses and
disbursements incurred by you at or prior to the time of the Closing in
connection with the transactions contemplated by the Operative Documents,
including, without limitation, the reasonable fees, expenses and disbursements
of your special counsel.
4.13. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by the Operative Documents and all agreements,
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to you and your special counsel, and you and
your special counsel shall have received all such counterpart originals or
copies of such agreements, documents and instruments as you or they may
reasonably request.
5. Representations and Warranties. The Companies jointly and severally represent
and warrant that (after giving effect to the transactions consummated at the
Closing):
5.1. Organization, Standing, etc. of the Companies. Each Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite power and authority
to own, lease and operate its properties, to carry on its business as now
conducted, and now proposed to be conducted as described in the Disclosure
Document referred to in section 5.4, to execute, deliver and perform each of the
Operative Documents to which it is (or is to be) a party and to consummate the
transactions contemplated by the Operative Documents. No approval of the
stockholders of either Company or any class thereof is required in connection
therewith which has not previously been obtained.
5.2. Subsidiaries. Exhibit 5.2 attached hereto is a complete and correct
list of the Holding Company's Subsidiaries (corporate or other) which correctly
specifies as to each such Subsidiary (a) its legal name, (b) the jurisdiction of
its organization, (c) each other jurisdiction in which it is qualified to do
business, (d) the authorized Shares of each Subsidiary (specifying the class or
classes thereof) and the number of such Shares outstanding, (e) the number (and
percentage) of such outstanding Shares owned by the Holding Company and its
other Subsidiaries and (f) the name of each other holder, if any, of such
Shares, together with the number (and percentage) held by such other holder.
Each Subsidiary of the Holding Company is a corporation or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
own, lease and operate its properties, to carry on its business as now
conducted, and now proposed to be conducted, as described in the Disclosure
Document referred to in section 5.4 and to execute, deliver and perform each of
the Operative Documents to which it is (or is to be) a party and to consummate
the transactions contemplated thereby. All of the outstanding Shares of each
Subsidiary of the Holding Company are validly issued, fully paid and
nonassessable and not subject to preemptive rights on the part of any other
Person, and all of such Shares have been offered, issued and sold by the issuer
thereof in compliance with all applicable laws. All of the Shares of the Holding
Company's Subsidiaries owned by the Holding Company and its Subsidiaries as
shown on Exhibit 5.2 attached hereto are so owned of record and beneficially and
free of any Lien (other than the Liens permitted pursuant to section 14.9(a)),
proxy, voting agreement, voting trust or similar agreement or restriction. The
Operating Company is a Wholly-Owned Subsidiary of the Holding Company.
5.3. Qualification. The Holding Company and each of its Subsidiaries is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the character of the properties owned or leased or the
nature of the activities conducted makes such qualification or licensing
necessary, except for those jurisdictions in which the failure to be so
qualified or licensed or to be in good standing has not resulted in, and could
not reasonably be expected to result in, a Material Adverse Change.
5.4. Business, etc. The Holding Company and its Subsidiaries are engaged in
the business of designing, engineering, manufacturing and selling bar code
scanning equipment (the "Business"), as further described in the Holding
Company's Annual Report on Form 10-K filed by the Holding Company with the
Commission for the fiscal year ended December 31, 1995, including all exhibits
and appendices thereto (the "Disclosure Document"), a true, correct and complete
copy of which has been furnished to you.
5.5. Shares; Stockholders.
(a) The authorized and outstanding Shares of the Holding Company are
fully and accurately described on Exhibit 5.5(a) attached hereto. All of
the outstanding Shares of the Holding Company are, and all Shares issued
upon exercise of any Warrants in accordance with the terms thereof will be,
validly issued, fully paid and nonassessable and not subject to preemptive
rights on the part of any other Person, and all of such Shares have been
(or will have been) offered, issued and sold by the Holding Company in
compliance with all applicable laws. The number of shares of Common Stock
of the Holding Company beneficially owned by each director and executive
officer of the Holding Company and its Subsidiaries and each other Person
that, individually or together with its Affiliates, beneficially owns 5% or
more of such shares of Common Stock (on a fully diluted basis), along with
the percentage of the total outstanding shares of Common Stock of the
Holding Company that such number represents of Common Stock of the Holding
Company (on a fully diluted basis), are set forth on Exhibit 5.5(a)
attached hereto. There are no outstanding Preferred Shares of the Holding
Company.
(b) Except as set forth on Exhibit 5.5(b) attached hereto, except as
provided in sections 11 and 12 and except for the Warrants: (i) there are
no outstanding rights, options, warrants or agreements for the purchase
from, or sale or issuance by, the Holding Company or any of its
Subsidiaries of any of its Shares or any other securities convertible into
or exercisable or exchangeable for such Shares; (ii) there are no
agreements on the part of the Holding Company or any of its Subsidiaries to
issue, sell or distribute any Shares or any properties and assets of the
Holding Company or any of its Subsidiaries; (iii) neither the Holding
Company nor any of its Subsidiaries has any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its Shares or
any interest therein or to pay any dividend or make any distribution in
respect thereof; and (iv) no Person is entitled to (A) any preemptive or
similar right with respect to the issuance of any Shares of the Holding
Company or any of its Subsidiaries or (B) any rights with respect to the
registration of any Shares of the Holding Company or any of its
Subsidiaries under the Securities Act.
(c) The aggregate number of shares of Common Stock issuable upon
exercise in full of the Warrants immediately after the Closing is 975,000
which, if then issued, would constitute 6.8% of the Common Stock
(calculated on a fully-diluted basis assuming the conversion, exercise and
exchange of all outstanding securities convertible into and exercisable or
exchangeable for shares of Common Stock, including without limitation the
Warrants). The Holding Company has reserved 975,000 shares of Common Stock
solely for issuance upon exercise of the Warrants.
5.6. Financial Statements. You have been furnished with:
(a) the financial statements referred to on Exhibit 5.6(a) attached
hereto, which financial statements are complete and correct in all material
respects (subject, in the case of any unaudited financial statements, to
the absence of footnote disclosure and normal year-end and audit
adjustments) and have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby and present fairly
in all material respects the financial position and the results of
operations and cash flows of the Person(s) purported to be covered thereby
as at the respective dates and for the respective periods indicated in
conformity with GAAP (subject, in the case of any unaudited financial
statements, to the absence of footnote disclosure and normal year-end and
audit adjustments);
(b) the projections referred to on Exhibit 5.6(b) attached hereto,
which projections were prepared in good faith, are based upon assumptions
that the Companies believe are reasonable and take into account all
material information regarding the matters set forth therein. Such
projections represent a reasonable estimate by the Companies of the future
financial performance of the Holding Company and its Subsidiaries. The
Companies do not presently anticipate any material deviation from such
projections and the Companies reasonably believe that the results of
operations reflected therein are attainable; and
(c) the pro forma unaudited consolidated balance sheet of the Holding
Company and its Subsidiaries referred to on Exhibit 5.6(c) attached hereto,
which balance sheet fairly presents the financial position of the Holding
Company and its Subsidiaries as at May 31, 1996, adjusted on a pro forma
basis to give effect to the consummation of the transactions contemplated
by the Operative Documents, and reflects all known material liabilities of
the Holding Company and its Subsidiaries, contingent or other, as at the
Closing Date, required by GAAP to be reflected therein.
5.7. Changes; Solvency, etc. Since December 31, 1995: (a) there has been no
change in the assets, liabilities or financial condition of the Holding Company
and its Subsidiaries from that set forth in the balance sheet as at such date
referred to on Exhibit 5.6 attached hereto, other than changes in the ordinary
course of business which have not been, either in any case or in the aggregate,
materially adverse; (b) no condition or event has occurred which has resulted
in, or could reasonably be expected to result in, a Material Adverse Change; and
(c) except as set forth on Exhibit 5.7 attached hereto, neither the Holding
Company nor any of its Subsidiaries has, directly or indirectly, declared,
ordered, paid or made any Restricted Payment. Each of the Holding Company and
its Subsidiaries are Solvent.
5.8. Tax Returns and Payments. The Holding Company and its Subsidiaries
have filed all tax returns required by law to be filed and have paid all taxes,
assessments and other governmental charges levied upon their respective
properties, assets, income, receipts, franchises or sales, other than those not
yet delinquent and those, not substantial in aggregate amount, being or about to
be contested as provided in section 14.2(a). The income tax liability of the
Holding Company and its Subsidiaries has been finally determined by the Internal
Revenue Service, and satisfied, or the time for audit has expired, for the
fiscal years listed on Exhibit 5.8 attached hereto. The Holding Company and its
Subsidiaries have not executed any waiver or waivers that would have the effect
of extending the applicable statute of limitations in respect of income tax
liabilities. The charges, accruals and reserves in the financial statements of
the Holding Company and its Subsidiaries in respect of taxes for all fiscal
periods are adequate in the opinion of the Companies, and the Companies know of
no unpaid assessments for additional taxes for any fiscal period or of any basis
therefor.
5.9. Funded Debt, Current Debt, Liens, Investments and Transactions with
Affiliates. Exhibit 5.9 attached hereto correctly describes:
(a) all Funded Debt and/or Current Debt of the Holding Company and/or
any of its Subsidiaries to be outstanding immediately following the Closing
(other than that evidenced by the Notes);
(b) all Liens to which any of the properties and assets of the Holding
Company and/or any of its Subsidiaries will be subject immediately
following the Closing (other than those of the character described in
section 14.9(b));
(c) all Investments (and all agreements and commitments to make
Investments) of the Holding Company and/or any of its Subsidiaries to be
owned or held (or in effect) immediately following the Closing (other than
Cash Equivalents);
(d) all Affiliates of the Holding Company and/or any of its
Subsidiaries and all transactions or series of transactions that involved
(or will involve) an aggregate value of $1,000,000 or more with Affiliates
of the Holding Company and/or any of its Subsidiaries which were
consummated during the 12-month period ended on the Closing Date or which
the Holding Company and/or any of its Subsidiaries is now obligated or now
intends to consummate at any time in the future; and
(e) each lease, other than Capital Leases, under which the Holding
Company and/or any of its Subsidiaries is lessee or sublessee and is or
shall be obligated to pay $25,000 or more during any period of twelve
consecutive months after the Closing Date, and, with respect to each such
lease, the name of the lessor, the lessee or sublessee, a general
description of the property leased, the annual Rental Obligations payable
thereunder and the term thereof.
5.10. Title to Properties; Liens; Leases. The Holding Company and its
Subsidiaries have good and marketable title to all of their respective
properties and assets, including, without limitation, the properties and assets
reflected in the balance sheet, dated December 31, 1995, referred to on Exhibit
5.6 attached hereto, except properties and assets disposed of since such date in
the ordinary course of business, free of all Liens (other than the Liens
permitted under section 14.9). The Holding Company and its Subsidiaries enjoy
peaceful and undisturbed possession under all material leases under which they
operate, and all of such leases are valid, subsisting and in full force and
effect. None of such leases contains any unusual or burdensome provision, which,
in either case, has resulted in, or could reasonably be expected to result in, a
Material Adverse Change.
5.11. Litigation, etc. Except as set forth on Exhibit 5.11(a), there is no
action, proceeding or investigation pending or, to the knowledge of either
Company, threatened (or any basis therefor known to either Company) which
questions the validity of any of the Operative Documents or any action taken or
to be taken pursuant thereto or which has resulted in, or could reasonably be
expected to result in, a Material Adverse Change. There is no outstanding
judgment, decree or order which has resulted in, or could reasonably be expected
to result in, a Material Adverse Change. Exhibit 5.11(b) attached hereto is a
complete and correct list of all actions and proceedings pending against the
Holding Company and any of its Subsidiaries.
5.12. Valid and Binding Obligations; Compliance with Other Instruments,
Borrowing Restrictions, etc.
(a) This Agreement has been duly authorized, executed and delivered by
each Company and constitutes the valid and legally binding obligation of
each Company enforceable against such Company in accordance with its terms.
Each of the other Operative Documents to which either Company and/or any of
their respective Subsidiaries is a party has been duly authorized by such
Person and, when executed and delivered, will constitute the valid and
legally binding obligation of such Person, enforceable against it in
accordance with its terms.
(b) Neither of the Companies nor any of their respective Subsidiaries
is in violation of or in default under any term of its Organizational
Documents, or of any agreement, document, instrument, judgment, decree,
order, law, statute, rule or regulation applicable to it or any of its
properties and assets, in any way which has resulted in, or could
reasonably be expected to result in, a Material Adverse Change. Without
limiting the generality of the foregoing, the Holding Company and each of
its Subsidiaries is in compliance with (and neither it nor any of its
predecessors in interest has received any notice to the contrary) and there
is no reasonable possibility of any liability of or any judgment, decree or
order binding upon or applicable to the Holding Company and/or any of its
Subsidiaries or any of their respective properties and assets under or on
account of any Environmental Laws, except where the same has not
resulted in, and could not reasonably be expected to result in, a Material
Adverse Change.
(c) The execution, delivery and performance of and the consummation of
the transactions contemplated by the Operative Documents will not violate
or constitute a default under, or permit any Person to accelerate or to
require the prepayment of any Indebtedness of the Holding Company or any of
its Subsidiaries or to terminate any material lease or agreement of the
Holding Company or any of its Subsidiaries pursuant to, or result in the
creation of any Lien upon any of the properties or assets of the Holding
Company or any of its Subsidiaries pursuant to, any term of its
Organizational Documents or of any agreement, document, instrument,
judgment, decree, order, law, statute, rule or regulation applicable to any
of them or any of their respective properties and assets.
(d) Neither the Holding Company nor any of its Subsidiaries is a party
to or bound by or subject to any agreement, document, instrument, judgment,
decree, order, law, statute, rule or regulation (other than the Operative
Documents and the Bank Credit Agreement and laws, statutes, rules or
regulations affecting creditors or businesses generally) (i) which
restricts its right or ability to incur Indebtedness, to issue securities
or to consummate the transactions contemplated hereby; (ii) under the terms
of or pursuant to which its obligation to pay all amounts due from it
and/or to perform all obligations imposed on it and/or to comply with the
terms applicable to it under any of the Operative Documents is in any way
restricted; (iii) which restricts its right or ability to make any
distributions to its stockholders or in respect of any of its Shares, to
mortgage or dispose of its properties, to consummate any merger,
consolidation or acquisition, to make Investments or Capital Expenditures,
to enter into and perform leases, to pay executive compensation and/or to
conduct its business as now conducted and now proposed to be conducted, or
(iv) which has resulted in, or could reasonably be expected to result in, a
Material Adverse Change.
5.13. ERISA.
(a) Each Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for
such instances of noncompliance which have not resulted in, and could not
reasonably be expected to result in, a Material Adverse Change. Neither
Company nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in section 3 of ERISA), and
no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by
either Company or any ERISA Affiliate, or in the imposition of any Lien on
any of the rights, properties or assets of either Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or to section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not individually or in
the aggregate result in a Material Adverse Change.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of
such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent
actuarial valuation report, did not exceed the aggregate current value of
the assets of such Plan allocable to such benefit liabilities. The term
"benefit liabilities" has the meaning specified in section 4001 of ERISA
and the terms "current value" and "present value" have the meaning
specified in section 3 of ERISA.
(c) The Companies and the ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate could result in a
Material Adverse Change. The Companies and the ERISA Affiliates have made
all required contributions to Multiemployer Plans. Neither Company nor any
ERISA Affiliate has incurred, nor would reasonably expect to incur, any
Withdrawal Liability upon a complete or partial withdrawal from any
Multiemployer Plan that individually or in the aggregate could result in a
Material Adverse Change. To the best of the Companies' knowledge, no
Multiemployer Plan is, or is reasonably expected to be, insolvent, in
reorganization or terminated within the meaning of Title IV of ERISA.
(d) Neither the Holding Company nor any of its Subsidiaries has any
material post retirement benefit obligations (determined in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B
of the Code).
(e) The consummation of the transactions contemplated by the Operative
Documents will not involve any transaction that is subject to the
prohibitions of section 406(a) of ERISA or in connection with which a tax
could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The
representation by the Companies in the first sentence of this section
5.13(e) is made in reliance upon and subject to the accuracy of your
representation in section 26 as to the sources of the funds used to pay the
purchase price of the Securities to be purchased by you.
5.14. Consents, etc. No consent, approval or authorization of, or
declaration or filing with, or other action by, any Person (including, without
limitation, any creditor of or lender to the Holding Company or any of its
Subsidiaries and any governmental (13)
authority) is required as a condition precedent to the valid execution, delivery
and performance of and the consummation of the transactions contemplated by the
Operative Documents.
5.15. Proprietary Rights; Licenses. Except as disclosed on Exhibit 5.15
attached hereto, the Holding Company and its Subsidiaries have all Proprietary
Rights and Licenses as are adequate for the conduct of their respective
businesses as now conducted and now proposed to be conducted, without any known
conflict with the rights of others. Each such Proprietary Right and License is
in full force and effect, all material obligations with respect thereto have
been fulfilled and performed and, to the knowledge of the Companies, there is no
infringement thereon by any other Person. No default in the performance or
observance by the Holding Company and/or any of its Subsidiaries (or, to the
knowledge of the Companies, any of their respective predecessors in interest) of
its obligations thereunder has occurred which permits, or after notice of lapse
of time or both would permit, the revocation or termination of any material
Proprietary Right or License or which has resulted in, or could reasonably be
expected to result in, a Material Adverse Change.
5.16. Offer of Securities; Investment Bankers. Neither Company nor any of
their respective Subsidiaries nor any Person acting on their behalf (a) has
directly or indirectly offered the Securities or any part thereof or any similar
securities for issue or sale to, or solicited any offer to buy any of the same
from, anyone other than you and the Other Purchasers and not more than 65 other
institutional investors, (b) has taken or will take any action which would bring
the issuance and sale of the Securities within the provisions of Section 5 of
the Securities Act or the registration or qualification provisions of any
applicable blue sky or other securities laws, (c) has dealt with any broker,
finder, commission agent or other similar Person in connection with the sale of
the Securities and the other transactions contemplated by the Operative
Documents, other than Fleet National Bank, or (d) is under any obligation to pay
any broker's fee, finder's fee or commission in connection with such
transactions, other than a fee to Fleet National Bank, which fee is the
obligation solely of the Holding Company.
5.17. Government Regulation. Neither the Holding Company nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Investment Company Act of 1940 or the
Interstate Commerce Act, each as amended.
5.18. Labor Relations; Suppliers, Distributors and Customers. No dispute
involving employees of the Holding Company or any of its Subsidiaries or the
relationship of the Holding Company or any of its Subsidiaries with its
employees has resulted in, or could reasonably be expected to result in, any
Material Adverse Change. The relationships with the suppliers to and
distributors for and customers of the Holding Company and its Subsidiaries are
satisfactory commercial working relationships and, during the 12-month period
ended on the Closing Date, no such supplier, distributor or customer has
cancelled or otherwise terminated its relationship with or decreased its
services, supplies or materials to or its usage or purchase of the services or
products of the Holding Company or any of its Subsidiaries in a manner which has
resulted in, or could reasonably be expected to result in, a Material Adverse
Change. The Holding Company is not aware of any intention of any such supplier,
distributor or customer to take any such action which could reasonably be
expected to result in a Material Adverse Change.
5.19. Voting Provisions. Except as set forth on Exhibit 5.19 attached
hereto, neither the Organizational Documents of the Holding Company nor any
other agreement, document or instrument binding on or applicable to the Holding
Company or its stockholders contains any provision requiring a higher voting
requirement with respect to action taken (and/or to be taken) by the
stockholders or directors of the Holding Company than that which would apply in
the absence of such provision.
5.20. Disclosure. Neither this Agreement nor any of the other Operative
Documents nor any other document, certificate or written statement furnished to
you by or on behalf of either Company or any of their respective Subsidiaries in
connection with the transactions contemplated by the Operative Documents
(including, without limitation, the Disclosure Document), contains 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 in the
light of the circumstances under which such statements were made, it being
understood that, except as set forth in section 5.6, no representation or
warranty is made with respect to any projections or other prospective financial
information. There is no fact known to either Company (other than information
concerning general economic conditions known to the public generally) which has
resulted in, or could reasonably be expected to result in, a Material Adverse
Change which has not been set forth in this Agreement, the other Operative
Documents and the other documents, certificates and written statements referred
to above in this section 5.20.
6. Use of Proceeds.
(a) The proceeds of the sale of the Securities received by the
Companies at the Closing will be used on the Closing Date to make the
payments to the Persons and for the purposes specified on Exhibit 6
attached hereto and any remaining balance of such proceeds will be used for
general corporate purposes of the Operating Company and its Subsidiaries.
(b) The Companies do not own, and will not, and will not permit any of
their respective Subsidiaries to, directly or indirectly, use any part of
the proceeds of the sale of the Securities for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation G (12 CFR Part
207) of the Board of Governors of the Federal Reserve System (herein called
a "margin security") or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might constitute the transactions
contemplated by the Operative Documents a "purpose credit" within the
meaning of said Regulation G or cause this Agreement or any of the other
Operative Documents to violate Regulation G or any other regulation of the
Board of Governors of the Federal Reserve System, or the Exchange Act or
any other applicable law, statute, regulation, rule, order or restriction.
7. Financial Statements and Information. The Companies will furnish to you
in duplicate, so long as you shall be obligated to purchase Securities hereunder
or shall hold any of the Notes or Warrants, and to each other institutional
holder from time to time of any of the Notes or Warrants:
(a) as soon as available and in any event within 45 days after the end
of each quarterly accounting period in each fiscal year of the Holding
Company (other than the last quarterly accounting period of each such
fiscal year), the consolidated and, if otherwise prepared, consolidating
balance sheets of the Holding Company and its Subsidiaries as at the end of
such period and the related consolidated and, if otherwise prepared,
consolidating statements of income, retained earnings and cash flows for
such period and for the portion of such fiscal year ended on the last day
of such period, in each case setting forth in comparative form the
corresponding figures for the same period and portion of the prior fiscal
year and the corresponding figures from the budgets for such period and for
the fiscal year which includes such period;
(b) as soon as available and in any event within 90 days after the end
of each fiscal year of the Holding Company, the consolidated and
consolidating balance sheets of the Holding Company and its Subsidiaries as
at the end of such year and the related consolidated and consolidating
statements of income and retained earnings and a consolidated and, if
otherwise prepared, consolidating statement of cash flows for such year, in
each case setting forth in comparative form the corresponding figures for
the prior fiscal year and the corresponding figures from the budget for
such fiscal year, all in reasonable detail and accompanied by an opinion
acceptable to the Required Holders of the Notes and of the Warrants on such
consolidated financial statements of the Holding Company) and its
Subsidiaries of Arthur Andersen LLP (or other accountants of recognized
national standing selected by the Holding Company) which report shall (i)
state that the audit of such accountants in connection with such
consolidated financial statements has been conducted in accordance with
generally accepted auditing standards and that such accountants believe
that such audit provides a reasonable basis for their opinion, (ii) contain
the other statements required from time to time by the American Institute
of Certified Public Accountants, (iii) include the opinion of such
accountants that such consolidated financial statements present fairly in
all material respects the consolidated financial position of the Holding
Company and its Subsidiaries as at the end of such fiscal year and the
consolidated results of operations and cash flows for such fiscal year, in
conformity with GAAP, and (iv) be accompanied by a separate letter from
such accountants which shall state (A) that such accountants are familiar
with the terms of this Agreement, the Other Securities Purchase Agreements
and the Securities and provide negative assurance relative to compliance
with the applicable covenants of this Agreement, the Other Securities
Purchase Agreements and the Securities as they relate to accounting matters
and (B) whether or not their examination has disclosed the existence,
during or at the end of the fiscal year covered by such financial
statements and/or the date of such letter, of any Default or Event of
Default and, if their examination has disclosed such a condition or event,
specifying in reasonable detail the nature and period of existence thereof,
provided that in issuing such certificate such accountants shall not be
required to go beyond normal accounting procedures conducted in connection
with issuing their report referred to above;
(c) together with each delivery of financial statements pursuant to
sections 7(a) and 7(b), an Officers' Certificate which shall:
(i) certify that such financial statements have been prepared in
accordance with GAAP (subject, in the case of any unaudited financial
statements, to normal year-end and audit adjustments and the omission
of footnotes) applied on a consistent basis throughout the periods
covered thereby and present fairly in all material respects the
consolidated financial position and the consolidated results of
operations and cash flows of the Holding Company and its Subsidiaries
as at the end of and for the periods covered thereby in conformity
with GAAP;
(ii) state that, after due inquiry, the signers do not have
knowledge of the existence, during the fiscal period covered by such
financial statements or as at the date of such Officers' Certificate,
of (A) any "reportable condition" (as defined in Statement on Auditing
Standards No. 60 issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants) in the internal
control structure of the Holding Company or any of its Subsidiaries or
(B) any Default or Event of Default, or, if such is not the case,
specifying in reasonable detail the nature and period of existence
thereof and what action the Holding Company or the applicable
Subsidiary has taken, is taking and proposes to take with respect
thereto;
(iii) (A) show in reasonable detail all computations required to
demonstrate compliance, during and at the end of the fiscal period
covered by such financial statements, with the provisions of sections
14.5, 14.6, 14.7, 14.9, 14.11 and 14.15 (including, without
limitation, the computation of Consolidated EBITDA for such period)
and (B) in the case of the Officer's Certificate accompanying the
financial statements required under section 7(b), set forth in
reasonable detail the fair market values of any significant properties
and assets disposed of during the fiscal year covered by such
financial statements;
(iv) include in reasonable detail management's discussion and
analysis of the results of operations and the financial condition of
Holding Company and its Subsidiaries as at the end of and for the
fiscal period covered by such financial statements, including a
discussion of any significant variation from the budgets for such
period delivered pursuant to section 7(h); and
(v) if there shall exist any Subsidiary of the Holding Company as
of the date of such Officers' Certificate which did not exist as of
the date of the last Officers' Certificate delivered pursuant to this
section 7(c), specify with respect to each such Subsidiary the
information called for by Exhibit 7(c)(v), contain a brief description
of the nature of each such Subsidiary's business and certify that each
such new Subsidiary is a party to a Note Guarantee;
(d) as promptly as practicable (but in any event not later than five
Business Days) after receipt thereof, copies of all final reports or
written comments (including, without limitation, audit reports, management
letters and any other reports with respect to the internal control
structure of the Holding Company or any of its Subsidiaries) submitted by
independent accountants;
(e) as promptly as practicable (but in any event not later than five
Business Days) after the same are available, copies of (i) all notices,
proxy statements, financial statements, reports and documents as the
Holding Company shall send or make available generally to its stockholders
or as any Subsidiary of the Holding Company shall send or make available
generally to its stockholders other than the Holding Company and (ii) all
periodic and special reports, documents and registration statements (other
than on Form S-8) which the Holding Company or any Subsidiary of the
Holding Company furnishes or files, or any officer or director or
stockholder of the Holding Company or any of its Subsidiaries furnishes or
files with respect to the Holding Company or any of its Subsidiaries with
the Commission (or any analogous foreign governmental authority) or any
securities exchange if furnished or available to the Holding Company or any
of its Subsidiaries;
(f) as promptly as practicable (but in any event not later than five
Business Days) after the Chief Executive Officer or Chief Financial Officer
of the Holding Company becomes aware of the occurrence of any of the
following conditions or events, an Officers' Certificate specifying in
reasonable detail the nature and period of existence thereof, what action
the Holding Company or any of its Subsidiaries has taken, is taking and
proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in section
4043(b) of ERISA and the regulations thereunder, for which notice thereof
has not been waived pursuant to such regulations as in effect on the date
hereof; (ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by either Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has been
taken by the PBGC with respect to such Multiemployer Plan; or (iii) any
event, transaction or condition that could result in the incurrence of any
liability by either Company or any ERISA Affiliate pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on any of the
rights, properties or assets of either Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other such
liabilities or Liens then existing, has resulted in, or could reasonably be
expected to result in, a Material Adverse Change;
(g) as promptly as practicable (but in any event not later than two
Business Days) after the occurrence of any Default or Event of Default, or
of any condition or event which has resulted in, or could reasonably be
expected to result in, a Material Adverse Change, an Officers' Certificate
specifying in reasonable detail the nature and period of existence thereof,
what action the Holding Company or any of its Subsidiaries has taken, is
taking and proposes to take with respect thereto and the date, if any, on
which it is estimated the same will be remedied;
(h) as promptly as practicable (but in any event not later than 30
days) after the end of each fiscal year of the Holding Company, an annual
budget prepared on a quarterly basis for the Holding Company and its
Subsidiaries for the succeeding fiscal year (displaying anticipated balance
sheets and statements of income, retained earnings and cash flows) and,
promptly upon preparation thereof, any revisions of such annual budget;
(i) such other material information and notices relating to the
Holding Company and/or any of its Subsidiaries as shall be furnished to or
received from the Sellers or any bank, financial institution or other
Person to which the Holding Company or any of its Subsidiaries is indebted
for borrowed money (other than that relating solely to collateral for such
Indebtedness), including, without limitation, any notice of default or
event of default under the Seller Notes and/or the Bank Credit Agreement,
such information and notices to be furnished to the holders of the
Securities at the same time as it is furnished to, or immediately after it
is received from, any such bank, financial institution or other Person; and
(j) such other information as from time to time may reasonably be
requested.
8. Inspection. The Holding Company will permit any Person designated by any
institutional holder of any of the Notes or Warrants on reasonable notice and at
such holder's expense (unless a Default or Event of Default shall have occurred
and be continuing, in which case, at the Companies' expense), to visit and
inspect any of the properties of the Holding Company and its Subsidiaries, to
examine its and their books and records (and to make copies thereof and take
extracts therefrom) and to discuss its and their affairs, finances and accounts
with and to be advised as to the same by, its and their officers and outside
counsel (and if a Default or Event of Default shall have occurred and be
continuing, its and their independent accountants, each of whom the Companies
hereby direct and authorize to engage in such discussions under such
circumstances), all at such reasonable times and intervals as such holder may
desire.
9. Prepayment of Notes.
9.1. Required Annual Prepayment Without Premium of Notes. In addition to
paying the entire outstanding principal amount of and the interest due on the
Notes on the maturity date thereof, on each June 30, commencing June 30, 2003,
until the Notes have been paid in full, the Operating Company will prepay
without premium $7,500,000 principal amount of the Notes (or such lesser
principal amount thereof as shall then be outstanding). No partial prepayment of
the Notes shall alter the obligation of the Operating Company to make the
required prepayments provided for in this section 9.1.
9.2. Optional Prepayment With Premium of Notes. At any time and from time
to time, the Operating Company may, at its option, upon notice as set forth in
section 9.5, prepay all or any part (in an integral multiple of $500,000 and a
minimum of $1,000,000 or such lesser principal amount thereof as shall then be
outstanding) of the Notes upon the concurrent payment of an amount equal to the
Make Whole Amount. Any partial prepayment of Notes pursuant to this section 9.2
shall be applied to the payment of installments of principal of the Notes in
inverse order of maturity.
9.3. Optional Prepayment With Premium of the Notes with the Proceeds of
Certain Public Offerings. Concurrent with (or immediately following) a closing
of a sale by the Holding Company to the public of its Shares pursuant to an
effective registration statement filed by the Holding Company with the
Commission under the Securities Act resulting in net proceeds to the Holding
Company from such sale of not less than $25,000,000, the Operating Company may,
at its option, upon notice as set forth in section 9.5, prepay all (subject to
the limitation set forth in the second proviso to this sentence) or any part (in
an integral multiple of $500,000 and a minimum of $1,000,000 or such lesser
principal amount thereof as shall then be outstanding) of the Notes upon the
concurrent payment of an amount equal to the Special Prepayment Premium,
provided that such prepayment shall be made only with available net proceeds of
such sale of Shares to the public, and provided, further, that in no event shall
the aggregate principal amount of Notes prepaid by the Operating Company from
time to time pursuant to this section 9.3 exceed $10,000,000. Each notice
pursuant to section 9.5 of a prepayment under this section 9.3 shall be
accompanied by an Officers' Certificate certifying and demonstrating that this
section 9.3 is being complied with in connection with such prepayment and
specifying the source or sources of funds to be used for such prepayment. Any
partial prepayment of Notes pursuant to this section 9.3 shall be applied to the
payment of installments of principal of the Notes in inverse order of maturity.
9.4. Allocation of Partial Prepayments of Notes. In the case of each
partial prepayment of the Notes under this section 9, the principal amount to be
prepaid shall be allocated among all of the Notes at the time outstanding
(excluding any Notes at the time owned by either Company or any Affiliate of
either Company) in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof, with adjustments, to the extent practicable,
to compensate for any prior prepayments not made exactly in such proportion.
9.5. Notice of Optional Prepayments of Notes. In the case of each
prepayment under sections 9.2 and 9.3, the Operating Company shall give written
notice thereof to each holder of any Notes not less than 30 nor more than 60
days prior to the date fixed for such prepayment. Each such notice shall set
forth: (a) the date fixed for prepayment (which, in the case of a prepayment
under section 9.3 may be a good faith approximation of such date); (b) the
aggregate principal amount of Notes to be prepaid on such date; and (c) the
aggregate principal amount of Notes held by such holder to be prepaid on such
date and the amount of accrued interest and an estimation of the Applicable
Premium to be paid to such holder on such date (together with the calculation of
such estimated Applicable Premium, which calculation shall be satisfactory to
each holder of the Notes to be prepaid).
9.6. Maturity; Accrued Interest; Surrender, etc. of Notes. In the case of
each prepayment of all or any part of any Note, the principal amount to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the premium, if any, due thereon. Any Note prepaid in full shall be
surrendered to the Operating Company at the Operating Company's principal place
of business promptly following prepayment and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal amount of
any Note.
9.7. Purchase of Notes. The Companies will not, and will not permit any
Affiliate of either Company to, directly or indirectly, purchase or otherwise
acquire, or offer to purchase or otherwise acquire, any outstanding Notes except
by way of payment or prepayment in accordance with the provisions of the Notes
and this Agreement.
9.8. Payment on Non-Business Days. If any amount hereunder or under the
Notes shall become due on a day which is not a Business Day, such payment shall
be due on the next succeeding Business Day.
9.9. Application of Notes in Satisfaction of Exercise Price of Warrants. In
the event that any holder of any Note shall apply all or any portion of the
principal amount of such Note in satisfaction (in whole or in part) of the
payment of the Exercise Price (as defined in the Warrants), any partial
application of the principal amount of any such Note shall be applied to the
payment of installments of principal due thereunder in the inverse order of
maturity.
10. Subordination of Notes.
10.1. Certain Definitions. As used in this section 10, the following terms
have the following respective meanings:
"Accrued Bankruptcy Interest" shall mean, with respect to any
Indebtedness, all interest accruing thereon after the filing of a petition
by or against either Company under the Bankruptcy Code, in accordance with
and at the rate (including any rate applicable upon any default or event of
default, to the extent lawful) specified in the documents evidencing or
governing such Indebtedness, whether or not the claim for such interest is
allowed as a claim after such filing in any proceeding under the Bankruptcy
Code.
"Bankruptcy Code" shall mean 11 U.S.C. 101 et seq., as from time to
time hereafter amended, and any successor or similar federal statute.
"Material Default" shall mean (a) any default in the payment when due
of fees or expenses that constitute Superior Indebtedness and/or (b) any
default under section 6.01(f) of the Bank Credit Agreement and any other
Event of Default (other than an Event of Default under section 6.01(a))
under the Bank Credit Agreement, or a default or Event of Default, as
applicable, under the analogous provisions of any Refinancing Agreement.
"Obligors" shall mean each of the Companies and each Person who has
executed and delivered a Note Guarantee.
"Permissible Securities" shall mean securities the payment of which is
subordinated, at least to the extent provided in this section 10 with
respect to the Subordinated Indebtedness, to the payment of all Superior
Indebtedness at the time outstanding and all securities issued in exchange
therefor.
"Refinancing Agreement" shall mean the loan agreements, documents and
instruments, if any, entered into by the Companies in compliance with this
Agreement, pursuant to which Indebtedness is incurred by the Companies
which
refinances or refunds all or any portion of the Indebtedness under the Bank
Credit Documents, provided that all of such refinancing or refunding
Indebtedness is permitted under section 14.5(a)(iv) and provided, further,
that the terms of such loan agreements, documents and instruments, taken as
a whole, are no more restrictive upon the Obligors and no more adverse to
the interests of the holders of the Securities than those of the Bank
Credit Documents.
"Subordinated Indebtedness" shall mean the principal amount of the
Indebtedness evidenced by the Notes, together with any interest, premium,
if any, fee, expense and/or other amount due thereon or payable with
respect thereto, including any such amounts payable by any guarantor of the
Notes.
"Superior Indebtedness" shall mean the principal amount of all Funded
Debt and Current Debt (including the face amount of letters of credit) of
the Operating Company under the Bank Credit Agreement, the other Bank
Credit Documents or under any Refinancing Agreement, together with any
interest (including Accrued Bankruptcy Interest), premium, if any, fee,
expense, other reimbursement obligations in respect of letters of credit
and/or other amount due thereon or payable with respect thereto, including
any such amounts payable by any guarantor of any Superior Indebtedness,
provided that the aggregate principal amount (and face amount of letters of
credit) of all Superior Indebtedness (a) under the term loan facilities
established by the Bank Credit Agreement (or any Refinancing Agreement)
shall at no time exceed (i) $84,000,000 minus (ii) the sum of all
repayments of the principal of such Indebtedness and (b) under the
revolving credit facility established by the Bank Credit Agreement (or any
Refinancing Agreement) shall at no time exceed (i) $21,000,000 minus
(ii) the sum of all repayments of the principal of such Indebtedness (other
than any repayment that may be thereafter reborrowed under the revolving
credit facility) and minus (iii) the sum of all permanent reductions in the
amount of the borrowing availability under such revolving credit facility.
10.2. Subordinated Indebtedness Subordinated to Superior Indebtedness; No
Amendments.
(a) Each Obligor for itself and its successors and assigns covenants
and agrees, and each holder of any Subordinated Indebtedness, by its
acceptance thereof, shall be deemed to have agreed, notwithstanding
anything to the contrary in this Agreement, the Other Securities Purchase
Agreements, the Notes, or any of the other Operative Documents, that the
payment of the Subordinated Indebtedness shall be subordinated to the
extent and in the manner set forth in this section 10, to the prior payment
in full (in cash, Cash Equivalents of the kind described in clause (a) of
the definition of such term, other forms reasonably satisfactory to the
holder or holders of at least 75% in aggregate principal amount of the
Superior Indebtedness, or a combination of the foregoing) of all Superior
Indebtedness, and that each holder of Superior Indebtedness, whether now
outstanding or hereafter created, incurred, assumed or guaranteed, shall be
deemed to have acquired Superior Indebtedness in reliance upon the
provisions contained in this section 10. No present or future holder of
Superior Indebtedness shall be prejudiced in the right to enforce the
subordination of the Subordinated Indebtedness effected pursuant to this
section 10 by any act or failure to act on the part of any Obligor.
(b) Neither this section 10 nor any of the terms of the Subordinated
Indebtedness relating to the timing or amount of any payment (or
prepayment) of the principal of or premium, if any, or interest on the
Subordinated Indebtedness, or any other amount (including any fee or
expense) due thereon, shall be amended without the written consent of the
holder or holders of at least 66-2/3% in aggregate principal amount of the
Superior Indebtedness at the time outstanding.
(c) Unless and until the Superior Indebtedness has been paid in full
(in cash, Cash Equivalents of the kind described in clause (a) of the
definition of such term, other forms reasonably satisfactory to the holder
or holders of at least 75% in aggregate principal amount of the Superior
Indebtedness, or a combination of the foregoing), the Obligors shall not
grant to the holders of the Subordinated Indebtedness any Lien in or on any
of the assets of the Obligors to secure the Subordinated Indebtedness,
without the written consent of the holder or holders of at least 75% in
aggregate principal amount of the Superior Indebtedness at the time
outstanding.
10.3. Dissolution, Liquidation, Reorganization, etc. Upon any payment or
distribution of the assets of either Company of any kind or character, whether
in cash, property or securities, to creditors upon any dissolution, winding-up,
total or partial liquidation, reorganization, composition, arrangement,
adjustment or readjustment of such Company or its securities, whether voluntary
or involuntary, or in bankruptcy, insolvency, reorganization, liquidation or
receivership proceedings, or upon a general assignment for the benefit of
creditors, or any other marshalling of the assets and liabilities of such
Company, or otherwise (hereinafter a "Liquidation Payment"), then and in any
such event:
(a) the holders of the Superior Indebtedness shall be entitled to
receive payment in full (in cash, Cash Equivalents of the kind described in
clause (a) of the definition of such term, other forms reasonably
satisfactory to the holder or holders of at least 75% in aggregate
principal amount of the Superior Indebtedness, or a combination of the
foregoing) (or to have such payment duly provided for in a manner
reasonably satisfactory to the holders of Superior Indebtedness) of all
Superior Indebtedness, before any Liquidation Payment, whether in cash,
property or securities (other than Permissible Securities), is made on
account of or applied to the Subordinated Indebtedness;
(b) the Subordinated Indebtedness shall forthwith become due and
payable, and any Liquidation Payment, whether in cash, property or
securities (other than Permissible Securities), to which the holders of the
Subordinated Indebtedness would be entitled except for the provisions of
this section 10, shall be paid or delivered by any debtor, custodian,
liquidating trustee, agent or other Person making such Liquidation Payment,
directly to the holders of the Superior Indebtedness, or their
representative or representatives, ratably according to the aggregate
amounts remaining unpaid on account of such Superior Indebtedness, for
application to the payment thereof, to the extent necessary to pay all such
Superior Indebtedness in full after giving effect to any concurrent payment
or distribution, or provision therefor, to the holders of such Superior
Indebtedness; and
(c) each holder of the Subordinated Indebtedness at the time
outstanding hereby irrevocably authorizes and empowers each holder of the
Superior Indebtedness or such holder's representative to collect and
receive such holder's ratable share of any Liquidation Payment and to
receipt therefor, and, if any holder of Subordinated Indebtedness fails to
file a claim therefor at least seven (7) calendar days prior to the date
established by rule of law or order of court for such filing, to file and
prove (but not to vote) such claims therefor, provided that such holder of
Superior Indebtedness shall concurrently send written notice thereof to
each holder of Subordinated Indebtedness, together with a copy of the proof
of claim so filed.
Upon any payment or distribution of assets referred to in this section 10,
the holders of the Subordinated Indebtedness shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
bankruptcy, insolvency, reorganization, liquidation, receivership or other
proceeding is pending, or a certificate of the debtor, custodian, liquidating
trustee, agent or other Person making any such payment or distribution to such
holders, for the purpose of ascertaining the Persons entitled to participate
therein, the holders of the Superior Indebtedness, the then outstanding
principal amount of the Superior Indebtedness and any and all amounts payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this section 10.
10.4. No Payments With Respect to Subordinated Indebtedness in Certain
Circumstances.
(a) The Obligors will not, directly or indirectly, make or agree to
make, and neither the holder nor any assignee or successor holder of any
Subordinated Indebtedness will accept or receive any payment or
distribution (in cash, property or securities (other than Permissible
Securities) by set-off or otherwise), direct or indirect, of or on account
of all or any portion of any Subordinated Indebtedness if, at the time of
such payment or distribution or immediately after giving effect thereto all
of the following four conditions shall be satisfied:
(i) a Material Default shall have occurred which (other than in
the case of a default under section 6.01(f) of the Bank Credit
Agreement) permits the holder or holders of any Superior Indebtedness
to immediately accelerate the maturity thereof;
(ii) the Operating Company and the holder or holders of
Subordinated Indebtedness shall have received written notice (given as
provided in this Agreement) (each a "Subordination Notice") of such
Material Default from the holder or holders of such Superior
Indebtedness, or their representative or representatives (which notice
shall state that it is a "Subordination Notice" and shall make
explicit reference to the provisions of this section 10.4);
(iii) such Material Default shall not have been cured by any
Obligor or waived in writing by the requisite holder or holders of the
Superior Indebtedness with respect to which such Material Default
shall have occurred; and
(iv) less than 150 days shall have elapsed after the date of
receipt by the Operating Company and the holders of the Subordinated
Indebtedness of such Subordination Notice (any period during which the
restrictions imposed by this Section 10.4(a) are in effect being
hereinafter referred to as a "Blockage Period");
provided, however, that, for the purpose of this section 10.4(a), (x) not
more than one Blockage Period shall be in effect during any period of 360
consecutive days, (y) Blockage Periods shall not be in effect on more than
three occasions, and (z) no facts or circumstances constituting a Material
Default on the date any Subordination Notice is given may be used or shall
be effective as a basis for any subsequent Subordination Notice.
(b) The restrictions imposed by section 10.4(a) shall cease to apply
and the Obligors may resume payments in respect of the Subordinated
Indebtedness (including any payments which shall not have been made on
account of the provisions of this section 10, but excluding any payments
which may have become due solely on account of any acceleration of the
maturity of the Subordinated Indebtedness) or any judgment with respect
thereto upon the earliest to occur of (i) the cure of the Material Default
by any Obligor, (ii) the written waiver thereof by the requisite holder or
holders of the Superior Indebtedness with respect to which such Material
Default shall have occurred, (iii) the expiration of the Blockage Period
and (iv) the termination of such
Blockage Period by such requisite holder or holders of such Superior
Indebtedness.
(c) In the event any of (i) a default in the payment of any principal
or interest that constitutes a default in the payment of Superior
Indebtedness, which default continues unremedied and unwaived, (ii) the
failure of the Obligors to pay any Superior Indebtedness upon the maturity
thereof or (iii) an acceleration of the maturity of the principal of any
Superior Indebtedness in accordance with the terms thereof (which
acceleration has not been rescinded or annulled), such Superior
Indebtedness shall first be paid in full (in cash, Cash Equivalents of the
kind described in clause (a) of the definition of such term, other forms
reasonably satisfactory to the holder or holders of at least 75% in
aggregate principal amount of the Superior Indebtedness, or a combination
of the foregoing) (or provision for such payment shall be made in a manner
reasonably satisfactory to the holder or holders of such Superior
Indebtedness) before any payment or distribution (in cash, properties or
securities (other than Permissible Securities), by set-off or otherwise) is
made on account of or applied on the Subordinated Indebtedness.
(d) Nothing herein shall affect or impair the right of any holder of
any Notes to apply any amount payable in respect thereof to the payment of
any amount due upon the exercise of any Warrants at any time.
10.5. Payments and Distributions Received. If any payment or distribution
of any kind or character, whether in cash, property or securities (other than
Permissible Securities), shall be received by any holder of any of the
Subordinated Indebtedness in contravention of this section 10, such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered and transferred to, the holders of the Superior Indebtedness, or
their representative or representatives, ratably according to the aggregate
amount remaining unpaid on account of such Superior Indebtedness, for
application to the payment thereof, to the extent necessary to pay all such
Superior Indebtedness in full, after giving effect to any concurrent payment or
distribution, or provision therefor, to the holders of such Superior
Indebtedness, provided, that amounts so paid over shall be returned promptly to
the applicable holders of the Subordinated Indebtedness in the event the
Superior Indebtedness was otherwise paid in full. In the event of the failure of
any holder of any of the Subordinated Indebtedness to endorse or assign any such
payment or distribution, any holder of the Superior Indebtedness or such
holder's representative is hereby irrevocably authorized to endorse or assign
the same.
10.6. Subrogation. Subject to the payment in full of all Superior
Indebtedness, in case cash, property or securities otherwise payable or
deliverable to the holders of the Subordinated Indebtedness shall have been
applied pursuant to this section 10 to the payment of Superior Indebtedness,
then and in each such case, the holders of the Subordinated Indebtedness shall
be subrogated to the rights of each holder of Superior
Indebtedness to receive any further payment or distribution in respect of or
applicable to the Superior Indebtedness; and, for the purposes of such
subrogation, no payment or distribution to the holders of Superior Indebtedness
of any cash, property or securities to which any holder of Subordinated
Indebtedness would be entitled except for the provisions of this section 10
shall, and no payment over pursuant to the provisions of this section 10 to the
holders of Superior Indebtedness by the holders of the Subordinated Indebtedness
shall as between the Obligors, their creditors (other than the holders of
Superior Indebtedness) and the holders of Subordinated Indebtedness, be deemed
to be a payment by the Obligors to or on account of Superior Indebtedness.
10.7. Notice. In the event that any Subordinated Indebtedness shall be
transferred and/or shall become due and payable before the expressed maturity
thereof as the result of the occurrence of a default, the Operating Company will
give immediate written notice in writing of such happening to each holder of
Superior Indebtedness (together, in the case of any such transfer, with the
address of the transferee for purposes of this section 10, it being agreed that
the holders of Superior Indebtedness shall not be obligated to give to any such
transferee any notice required hereunder to be given by them to the holders of
Subordinated Indebtedness unless the holders of Superior Indebtedness shall have
received such notice (and the address of such transferee) from the Operating
Company (or, in the case of any such transfer, a notice from the transferee
containing substantially the same information)).
10.8. Subordination Not Affected, etc. The terms of this section 10, the
subordination effected hereby and the rights created hereby of the holders of
the Superior Indebtedness shall not be affected by (a) any amendment,
modification or waiver of or supplement to any Superior Indebtedness or any
agreement, document or instrument relating thereto, provided that such
amendment, modification, waiver or supplement is not in violation of this
Agreement, (b) any exercise or non-exercise of any right, power or remedy under
or in respect of any Superior Indebtedness (or any security or collateral
therefor) or pursuant to any agreement, document or instrument relating thereto
or (c) any consent, release, indulgence, delay or other action, inaction or
omission, in respect of any Superior Indebtedness (or any security or collateral
therefor) or pursuant to any agreement, document or instrument relating thereto,
whether or not any holder of any Subordinated Indebtedness shall have had notice
or knowledge of any of the foregoing.
10.9. Obligations Unimpaired. The provisions of this section 10 are solely
for the purpose of defining the relative rights of the holders of Superior
Indebtedness on the one hand and the holders of Subordinated Indebtedness on the
other hand, and (a) subject to the rights, if any, under this section 10 of the
holders of Superior Indebtedness, nothing in this section 10 shall (i) impair as
among the Obligors and the holder of any Subordinated Indebtedness the
obligation of the Obligors, which is unconditional and absolute, to pay to the
holder thereof all amounts due thereon in accordance with the terms thereof or
(ii) except as otherwise provided in section 10.11, prevent the holder of any
Subordinated Indebtedness from exercising all remedies available to such holder,
whether arising under the Operative Documents, applicable law or otherwise, and
(b) no Person is entitled to any third party beneficiary rights or other similar
rights on account of or under this section 10 other than the holders of the
Superior Indebtedness. The failure to make any payment due in respect of the
Subordinated Indebtedness or to comply with any of the terms and conditions of
any of the agreements, documents and instruments related to the Subordinated
Indebtedness by reason of any provision of this section 10 shall not be
construed as preventing the occurrence of any Default or Event of Default with
respect to the Subordinated Indebtedness.
10.10. Holders of Subordinated Indebtedness Entitled to Assume Payments Not
Prohibited in Absence of Notice. No holder of Subordinated Indebtedness shall at
any time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to it, unless and until such holder shall
have received written notice thereof (given as provided in this Agreement) from
the Operating Company or from any holder of Superior Indebtedness or any agent
or representative thereof. Prior to the receipt of any such notice, each holder
of Subordinated Indebtedness shall be entitled to assume conclusively that no
such facts exist, without, however, limiting any right of any holder of Superior
Indebtedness under this section 10 to recover from any holder of the
Subordinated Indebtedness any payment made in contravention of this section 10.
Each payment on the Subordinated Indebtedness by the Operating Company shall be
deemed to constitute a representation of the Operating Company that such payment
is permitted to be paid by the Operating Company under this section 10.
Each holder of Subordinated Indebtedness shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself to be a
holder of Superior Indebtedness or to be the agent or representative of any
holder of Superior Indebtedness to establish that such notice has been given by
any such Person. In the event that such holder of Subordinated Indebtedness
determines in good faith that further evidence is required with respect to the
right of any such Person to participate in any payment or distribution pursuant
to this section 10, such holder of Subordinated Indebtedness may request such
Person to furnish evidence to the reasonable satisfaction of such holder of
Subordinated Indebtedness as to any fact pertinent to the rights of such Person
under this section 1, and if such evidence is not furnished, such holder of
Subordinated Indebtedness may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
10.11. Limitation on Right of Action. Notwithstanding anything to the
contrary contained in this Agreement, the Notes or any of the other Operative
Documents, the holders of the Subordinated Indebtedness agree that, if any
Superior Indebtedness is outstanding, the holders of the Subordinated
Indebtedness will not exercise any right or remedy available to them on account
of any Default or Event of Default (other than the right to accelerate the
Subordinated Indebtedness in accordance with the terms thereof and the right to
exercise any of the Warrants) at any time at which payments may not be made in
respect of the Subordinated Indebtedness under section 10.4(a) unless and until
the first to occur of (a) the holder or holders of any Superior Indebtedness
shall have commenced appropriate proceedings (judicial or nonjudicial) for the
enforcement of their rights and remedies, including, without limitation, (i) any
action by any holder of any Superior Indebtedness against or with respect to any
Obligor to seek collection, or enforce collection, of any Superior Indebtedness,
or (ii) any exercise by any holder of any Superior Indebtedness of any right to
foreclose on any security interest or to sell any collateral or to exercise any
set-off or similar right, (b) a proceeding under the Bankruptcy Code or any
similar state statute or law (including any law providing for the appointment of
a receiver or other similar official) shall have been commenced by or against
either Company or any of their respective Subsidiaries (other than by the
holders of the Subordinated Indebtedness), or (c) an Event of Default shall have
occurred and shall have continued uncured and unwaived for a period of 150 days,
provided that, in any event, the holders of the Subordinated Indebtedness may
commence any legal proceeding or take any other appropriate action if and to the
extent necessary to prevent the imminent expiration of any applicable period of
limitations or the loss of any right under any applicable statute of limitations
or other law.
11. Registration, etc.
11.1. Shelf Registration.
(a) As soon as practicable following the Closing Date, the Holding
Company shall prepare and file with the Commission a registration statement
on Form S-3 with respect to all of the Registrable Shares and shall use its
best efforts to cause such registration statement to become effective as
soon as practicable, but in any event not later than the one year
anniversary of the Closing Date, so as to permit the sale to the public of
the Registrable Shares through such methods and means as shall be specified
in such registration statement at the direction of the holders of the
Registrable Shares. The Holding Company shall use its best efforts to keep
such registration statement current and effective with respect to all of
the Registrable Shares by such action as may be necessary or appropriate,
including, without limitation, the filing of post-effective amendments and
supplements, until the earlier of (i) the second anniversary of the
effectiveness of the registration statement and (ii) the date on which all
of the Registrable Shares have been sold to the public pursuant to an
effective registration statement or in accordance with Rule 144 (or any
similar provision then in force) under the Securities Act. In addition, if
at any time and from time to time prior to July 12, 2006, a registration
statement on Form S-3 is not effective with respect to the Registrable
Shares of any holder thereof, upon the request of such holder of
Registrable Shares, the Holding Company shall prepare and file with the
Commission a registration statement on Form S-3 with respect to such
holder's Registrable Shares (and the Registrable Shares of any other holder
thereof who shall notify the Holding Company, within 10 days of receiving
the notice referred to below in this Section 11.1(a), that it requests that
its Registrable Shares be included in such registration statement) and
shall use its best efforts to cause such registration statement to become
effective as soon as practicable following each such request of any holder
of Registrable Shares, so as to permit the sale to the public of such
Registrable Shares through such methods and means as shall be specified in
such registration statement at the direction of the holder or holders of
75% of the Registrable Shares to be included in such registration. The
Holding Company shall use its best efforts to keep such registration
statement current and effective with respect to all of the Registrable
Shares included in such registration statement by such action as may be
necessary or appropriate, including, without limitation, the filing of
post-effective amendments and supplements, until the earlier of (i) the
second anniversary of the effectiveness of such registration statement and
(ii) the date on which all of the Registrable Shares have been sold to the
public pursuant to an effective registration statement or in accordance
with Rule 144 (or any similar provision then in force) under the Securities
Act. Immediately following its receipt of any holder's request to register
Registrable Shares, the Holding Company shall notify each other holder of
Registrable Shares. The Holding Company may be required pursuant to this
Section 11.1 to file (and keep effective) such registration statements on
any number of occasions by the several holders of Registrable Shares.
(b) The obligations of the Holding Company under this section 11.1 are
subject to the following terms:
(i) the Holding Company shall not include in the registration
effected pursuant to this section 11.1 any other securities
(including, without limitation, any to be issued and sold by the
Holding Company), without the prior written consent of the holder or
holders of 75% of the Registrable Shares to be included in such
registration; and
(ii) the Holding Company shall pay all Registration Expenses
related to such registrations effected pursuant to this section 11.1.
(c) The Companies jointly and severally represent and warrant that the
Holding Company has and shall continue at all times to satisfy all of the
conditions to the use of Form S-3, including, without limitation, the
timely filing of all reports required to be filed under the Exchange Act
during the twelve calendar months preceding the date in question.
11.2. Incidental Registration.
(a) If the Holding Company at any time or from time to time shall
determine to effect the registration, qualification and/or compliance of
any of its Shares (whether in connection with an offering by the Holding
Company or others) (otherwise than pursuant to a registration effected
pursuant to section 2 of the Registration Rights and Holdback Agreement
dated as of July 12, 1996, by and between Spectra-Physics and the Holding
Company or a registration on a form inappropriate for an underwritten
public offering or relating solely to securities to be issued in a merger,
acquisition of the stock or assets of another entity or in a similar
transaction), then, in each such case, the Holding Company will:
(i) promptly give written notice of the proposed registration,
qualification and/or compliance (which shall include a list of the
jurisdictions in which the Holding Company intends to register or
qualify such securities under the applicable blue sky or other state
securities laws) to each holder of any Registrable Shares; and
(ii) include among the Shares which it then registers or
qualifies all Registrable Shares specified by any holder thereof in a
written request or requests, made within 30 days after receipt of such
written notice from the Holding Company.
(b) The obligations of the Holding Company under this section 11.2 are
subject to the following terms:
(i) the Holding Company shall pay all Registration Expenses
related to any registration, qualification or compliance requested
pursuant to this section 11.2; and
(ii) if, in connection with any underwritten offering pursuant to
this section 11.2, the managing underwriter(s) shall impose a
limitation on the number or kind of securities which may be included
in any such registration because, in its reasonable judgment, such
limitation is necessary to effect an orderly public distribution, then
the Holding Company shall be obligated to include in such registration
statement only such limited portion of the Registrable Shares (which
may be none) as is determined in good faith by such managing
underwriter, provided that, if any securities are being offered for
the account of any Person other than the Holding Company and the
holders of the Registrable Shares, the reduction in the number of
Registrable Shares included in such registration shall not represent a
greater percentage of the amount of Registrable Shares originally
requested to be registered and sold in such registration than the
lowest such percentage reduction imposed upon any other Person.
11.3. Permitted Registration. If and to the extent that any holder or
holders of any Registrable Shares shall have, at the time of delivery of the
written request referred to in section 11.2, no present intention of selling or
distributing such securities, the Holding Company shall be obligated to effect
the registration, qualification and compliance of such securities of such holder
or holders only if and to the extent, in each case, that such registration,
qualification and compliance are at the time permitted by the applicable
statutes or rules and regulations thereunder or the practices of the
governmental authority concerned.
11.4. Registration Procedures. In the case of each registration,
qualification and/or compliance contemplated by this section 11, the Holding
Company will keep the holder or holders of Registrable Shares advised in writing
as to the initiation of proceedings for such registration, qualification and
compliance and as to the completion thereof, and will advise each such holder,
upon request, of the progress of such proceedings. In addition, the Holding
Company will follow procedures customarily observed by issuers in registered
public offerings, and accord to the holder or holders of Registrable Shares all
rights (including, without limitation, the right to perform appropriate "due
diligence") customarily accorded to selling stockholders in secondary
distributions and to managing underwriters if the transaction in question is or
were an underwritten public offering. At the expense of the Holding Company, the
Holding Company will in the case of each registration, qualification and/or
compliance contemplated by this section 11 (a) take all necessary action under
any applicable blue sky or other state securities law to permit the sale and/or
distribution of the Registrable Shares pursuant thereto, all as requested by the
holder or holders of Registrable Shares included therein, provided that the
Holding Company shall not be required to so register or qualify the Registrable
Shares in any jurisdiction if, solely as a result thereof, the Holding Company
must qualify generally to do business therein or consent to general service of
process therein, (b) comply with applicable requirements of all regulatory
entities, including, without limitation, the National Association of Securities
Dealers, Inc., (c) furnish each holder of Registrable Shares included therein
such number of registration statements, prospectuses, supplements, amendments,
offering circulars and other documents incidental thereto as such holder from
time to time may reasonably request, (d) list all Registrable Shares on each
securities exchange on which securities of the same class are then listed and
(e) furnish (or cause to be furnished) to each holder of Registrable Shares, all
undertakings, agreements, certificates, opinions, financial statements and
"comfort letters" of the sort customarily provided to selling stockholders in
secondary distributions and to the managing underwriters, if the transaction in
question is or were an underwritten public offering. Each holder of Registrable
Shares will furnish to the Holding Company upon request by the Holding Company
such information regarding such holder and any distribution of Registrable
Shares proposed by such holder as may be required to consummate any
registration, qualification and/or compliance contemplated by this section 11.
11.5. Indemnification. Without limiting the generality of section 21, the
Companies will jointly and severally indemnify, defend and hold harmless each
holder of Registrable Shares included in any registration, qualification and/or
compliance contemplated by this section 11 and each underwriter of such
securities, and each Person, if any, who controls each such holder and
underwriter within the meaning of the Securities Act, and their respective
directors, officers, employees, agents, advisors and Affiliates (each, an
"Indemnified Person"), to the fullest extent enforceable under applicable law
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, supplement, amendment, offering circular or other document related
to any registration, qualification or compliance or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation (or
alleged violation) of the Securities Act or other securities laws in connection
with any such registration, qualification or compliance, and will reimburse each
such Indemnified Person for any legal or any other expenses reasonably incurred
in connection with investigating and/or defending (and/or preparing for any
investigation or defense of) any such claim, loss, damage, liability, action or
violation; provided that the Companies will not be liable in any such case to
any such Indemnified Person if, but only to the extent that, any such claim,
loss, damage, liability, action, violation or expense is finally determined to
arise out of or result from any untrue statement in or omission from written
information furnished to the Holding Company by an instrument duly executed by
such Indemnified Person and stated to be specifically for use therein. Each
holder of Registrable Shares will, if securities held by such holder are
included in a registration effected pursuant to this section 11, indemnify,
defend and hold harmless the Holding Company, each of its directors and officers
who signs the related registration statement, and each Person, if any, who
controls the Holding Company within the meaning of the Securities Act, against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
supplement, amendment, offering circular or other document or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Holding Company and such directors, officers or Persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
(and/or preparing for any investigation or defense of) any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) was made in (or omitted from) such registration statement, prospectus,
supplement, amendment, offering circular or other document in reliance upon and
in conformity with written information furnished to the Holding Company by an
instrument duly executed by such holder and stated to be specifically for use
therein; provided that the liability of any such holder under this section 11.5
shall be limited to the net sales proceeds actually received by such holder as a
result of the sale by it of securities in such registration.
11.6. Restrictions on Other Agreements. The Holding Company will not grant
any right relating to the registration of its securities if the exercise thereof
interferes with or is inconsistent with or will delay (or could reasonably be
expected to interfere with or be inconsistent with or delay) the exercise and
enjoyment of any of the rights granted under this section 11, without the
written consent of holders of 75% or more of (34) the Registrable Shares at the
time issued and/or issuable, which consent may be given or withheld in the sole
discretion of such holders. The Holding Company will not permit any of its
Subsidiaries to effect, or to grant any right relating to, the registration of
its securities.
12. Put Rights.
12.1. Put Rights. Each holder of Put Securities (as defined below) shall
have the right to require the Companies to purchase all or any portion of the
Put Securities owned by such holder concurrently with the occurrence of any Put
Event (as defined below), in each case at a purchase price equal to the
aggregate Put Price (as defined below) for such Put Securities. Each such holder
may exercise such option by delivering to the Companies a notice (a "Put
Notice") specifying that the Put Securities therein described are to be
purchased by the Companies and, if the Underlying Securities are not then
Publicly Traded, specifying the appraiser (first referred to in the definition
of Fair Value below) that shall determine the Fair Value of the Put Securities.
Upon receipt of any such Put Notice from a holder of Put Securities, the
Companies shall be obligated, jointly and severally, to purchase the Put
Securities specified in such Put Notice on the date upon which such Put Event
shall occur (the "Put Closing Date"), unless in any case the Companies and such
holder agree to a different date. The closing for any payment of the Put Price
due to any holder of Put Securities under this section 12.1 shall occur at the
principal office of the Companies, unless the Companies and such holder agree to
a different location, and the aggregate Put Price shall be paid in immediately
available funds against delivery of the certificates evidencing such Put
Securities as are to be purchased from such holder at such closing. Promptly
after receipt by the Companies of a Put Notice from a holder of Put Securities,
the Companies will notify each other holder of Put Securities of receipt of such
Put Notice and thereafter shall furnish to each holder such information relating
to the same as such holder may request from time to time. The Companies will
notify each holder of Put Securities of the occurrence of any event which will,
or could reasonably be expected to, result in a Put Event at least 30 days (but
not more than 60 days) prior to the occurrence of such Put Event. The Companies
shall not permit a Put Event to be consummated unless the notice required by the
preceding sentence with respect to such Put Event has been delivered in
accordance with such preceding sentence.
12.2. Defined Terms. As used herein, the following terms have the following
respective meanings:
"Current Market Price" of any Underlying Security as of any date
herein specified shall mean the average of the daily closing prices for the
30 consecutive trading days commencing 45 trading days before the day in
question. The closing price for each day shall be (a) if such Underlying
Security is listed or admitted for trading on any national securities
exchange, the last sale price of such Underlying Security, regular way, or
the average of the closing bid and asked prices thereof if no such sale
occurred, in each case as officially reported on the principal securities
exchange on which such Underlying Security is listed, or (b) if not
reported as described in clause (a), the average of the closing bid and
asked prices of such Underlying Security in the over-the-counter market as
shown by the National Association of Securities Dealers, Inc. Automated
Quotation System, if so quoted, as reported by any member firm of the New
York Stock Exchange selected by the Companies.
"Fair Value" shall mean the fair value of the appropriate Put Security
as determined in accordance with generally accepted financial practice by
an independent appraiser of recognized national standing selected by the
holders of a majority of the Put Securities requested to be repurchased
(provided such appraiser is reasonably satisfactory to the Companies). The
Companies shall use their best efforts to enable the independent appraiser
to provide its determination not later than 10 days following its
selection. Each such determination of Fair Value shall be set forth in
writing and shall be conclusive and binding on the Companies and on the
holders of the Put Securities to be repurchased. The Companies shall pay
all of the expenses incurred in connection with each such determination,
including, without limitation, the expenses of each appraiser.
"Publicly Traded" shall mean, with respect to the Underlying
Securities or the equity securities referred to in the definition of "Put
Event", on any date, listed or admitted for trading on any national
securities exchange or quoted on the over-the-counter market of the
National Association of Securities Dealers, Inc. Automated Quotation
System, in each case on such date and during the immediately preceding 45
consecutive days and having an average daily trading volume of not less
than 78,500 during such period.
"Put Event" shall mean (a) the merger or consolidation of the Holding
Company or any of its Material Subsidiaries with or into another Person
(other than a merger of the Holding Company with or into another Person,
the sole purpose and result of which is to change the jurisdiction of
incorporation of the Holding Company to another state of the United States)
which does not have a class of Publicly Traded equity securities registered
under the Exchange Act and where the consideration to be received by the
holders of the Holding Company's Shares in connection with such merger or
consolidation does not consist solely of cash payable in full upon
consummation of such merger or consolidation, or (b) the sale, transfer or
other disposition by the Holding Company or any of its Material
Subsidiaries of all or any substantial part of its properties and assets to
another Person for consideration which (i) is other than (A) Publicly
Traded equity securities registered under the Exchange Act and/or (B) cash
and (ii) is then distributed to the stockholders of the Holding Company or
the holders of Superior Indebtedness.
"Put Price" at any date, as applied to any Put Security, shall mean
(i) if the Underlying Securities are not then Publicly Traded, the Fair
Value thereof as of the date of occurrence of the applicable Put Event and
(ii) if the Underlying Securities are then Publicly Traded, the Current
Market Price thereof as of the date of occurrence of the applicable Put
Event. The Put Price of any Warrant shall be reduced by an amount equal to
the amount payable upon exercise thereof (if and to the extent not
otherwise paid to the Holding Company).
"Put Securities" shall mean the Warrants and the Underlying
Securities, each of which is a "Put Security".
12.3 Continued Effect. The provisions of this section 12 are applicable to
successive Put Events. No failure on the part of any holder of the Put
Securities to exercise any right under this section 12 arising on account of any
Put Event shall affect or impair any other right of such holder, in respect of
the Put Securities or otherwise, under any of the Operative Documents. The
covenants contained in this section 12 shall continue in effect so long as any
Put Securities are outstanding and, without limiting the generality of the
foregoing, shall survive the payment, prepayment and/or replacement of any other
Securities and any merger, consolidation, recapitalization, sale of assets or
other similar transaction or event involving the Holding Company and/or any of
its Subsidiaries.
13. Board Inspection Rights.
(a) At any reasonable time and from time to time, upon reasonable
notice, the Companies will permit any holder of the Notes or Warrants or
any agents or representatives thereof, to examine and make abstracts from
any resolutions and consents of, and any minutes and other records of
meetings of, the respective boards of directors (and committees thereof) of
the Holding Company and its Subsidiaries, and to discuss the affairs,
finances and accounts of the Holding Company and its Subsidiaries with any
of their directors.
(b) The Holding Company will meet at least once each calendar year
with representatives of the holders of the Notes and Warrants to discuss
the affairs, finances and accounts of the Holding Company and its
Subsidiaries.
14. Covenants of the Companies. From and after the date of this Agreement, and
thereafter so long as any of the Notes shall remain outstanding, the Companies
will duly perform and observe, for the benefit of the holders of the Notes, each
and all of the covenants and agreements hereinafter set forth:
14.1. Books of Record and Account; Reserves. Each Company will, and
will cause each of its Subsidiaries to (a) at all times keep proper books
of record and account in which full, true and correct entries shall be made
of its transactions in accordance with GAAP and (b) set aside on its books
from its earnings for each fiscal year all such proper reserves as shall be
required in accordance with GAAP in connection with its business.
14.2. Payment of Taxes; Existence; Maintenance of Properties;
Compliance with Laws; Lines of Business; Proprietary Rights. Each Company
will, and will cause each of its Subsidiaries to:
(a) pay and discharge promptly as they become due and payable all
taxes, assessments and other governmental charges or levies imposed
upon it or its income or upon any of its property, as well as all
claims of any kind (including claims for labor, materials and
supplies) which, if unpaid, might by law become a Lien upon its
property; provided that no such Person shall be required to pay any
such tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be contested in good
faith by appropriate proceedings promptly initiated and diligently
conducted and if it shall have set aside on its books such reserves,
if any, with respect thereto as are required by GAAP; provided,
further, that each Company will, and will cause each of its
Subsidiaries to, pay any such tax, assessment, charge, levy or claim
prior to the commencement of any proceeding to foreclose any Lien
securing the same;
(b) do or cause to be done all things necessary to preserve and
keep in full force and effect its existence (except that nothing in
this section 14.2(b) shall prohibit the consummation of any merger,
consolidation or other business combination permitted under sections
14.13, 14.14 and/or 14.15, as applicable);
(c) maintain and keep its material properties in good repair,
working order and condition, so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times;
(d) comply in all material respects with all applicable laws,
statutes, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental authorities in respect of
the conduct of its business and the ownership of its property
(including, without limitation, all Environmental Laws); provided that
no such Person shall be required by reason of this section 14.2(d) to
comply therewith at any time while it shall be contesting its
obligation to do so in good faith by appropriate proceedings promptly
initiated and diligently conducted, and if it shall have set aside on
its books such reserves, if any, with respect thereto as are required
by GAAP;
(e) engage only in the Business (and in other lines of business
related to the Business) substantially in the manner described in the
Disclosure Document; and
(f) own or have a valid license for all material Proprietary
Rights and Licenses used by it in the conduct of its business.
14.3. Insurance. Each Company will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers,
insurance with respect to its properties and businesses against loss or
damage of the kinds customarily insured against by Persons of established
reputation engaged in the same or a similar business and similarly
situated, in such amounts and by such methods as shall be customary for
such Persons and reasonably deemed adequate by the Companies.
14.4. Limitation on Discount or Sale of Receivables. Neither Company
will, and neither Company will permit any of their respective Subsidiaries
to, directly or indirectly, discount or sell any of their accounts
receivable, except that each Company or any such Subsidiary may settle
doubtful accounts or may grant discounts (such as quantity or prompt
payment discounts) in the ordinary course of business.
14.5. Limitation on Funded Debt and Current Debt. Neither Company
will, and neither Company will permit any of their respective Subsidiaries
to, be liable or create, assume, incur, guarantee, or in any manner become
liable, contingently or otherwise, in respect of any Funded Debt or Current
Debt other than:
(a) in the case of the Holding Company and the Operating Company:
(i) Funded Debt evidenced by the Notes;
(ii) Funded Debt evidenced by the Seller Notes, but no extension,
refinancing, refunding or renewal thereof;
(iii) Funded Debt and Current Debt outstanding on the date hereof and
referred to in Exhibit 5.9 attached hereto (excluding any Funded Debt or
Current Debt evidenced by the Seller Notes or outstanding under the Bank
Credit Documents), but no extension, refinancing, refunding or renewal
thereof;
(iv) Funded Debt or Current Debt outstanding under the Bank Credit
Documents and under any Refinancing Agreement (but no other extension,
refinancing, refunding or renewal of the Bank Credit Documents), provided
that the aggregate principal amount (and face amount of letters of credit)
of such Funded Debt and Current Debt (A) under the term loan facilities
established by the Bank Credit Agreement (or any Refinancing Agreement)
shall at no time exceed (1) $84,000,000 minus (2) the sum of all repayments
of the principal of such Indebtedness and (B) under the revolving credit
facility established by the Bank Credit Agreement (or any Refinancing
Agreement) shall at no time exceed (1) $21,000,000 minus (2) the sum of all
repayments of the principal of such Indebtedness (other than any repayment
that may be thereafter reborrowed under such revolving credit facility) and
minus (3) the sum of all permanent reductions in the amount of the
borrowing availability under such revolving credit facility;
(v) additional Funded Debt or Current Debt not otherwise permitted
under this section 14.5, provided that, both at the time of and immediately
after giving effect to the incurrence thereof and the retirement of any
Indebtedness which is concurrently being retired:
(A) no Default or Event of Default shall have occurred and be
continuing; and
(B) the aggregate outstanding principal amount of Funded Debt and
Current Debt incurred pursuant to this clause (v) shall not exceed at
any time the greater of (1) $10,000,000 and (2) such amount that, if
incurred at the end of the immediately preceding fiscal quarter of the
Holding Company, would have caused the Consolidated Indebtedness Ratio
(calculated at the end of such fiscal quarter on a pro forma basis) to
exceed 2.50 to 1.00; and
(vi) Funded Debt and Current Debt owed to any Wholly-Owned Subsidiary;
and
(b) in the case of any Subsidiary of the Holding Company (other than the
Operating Company):
(i) Funded Debt evidenced by the Note Guarantees;
(ii) Funded Debt arising under Guarantees of Funded Debt of the
Companies permitted under section 14.5(a)(iii), 14.5(a)(iv) and/or
14.5(a)(v); and
(iii) Funded Debt or Current Debt (other than that of a Foreign
Subsidiary) owed to the Holding Company or a Wholly-Owned Subsidiary (other
than a Foreign Subsidiary), provided that such Funded Debt or Current Debt
is evidenced by a promissory note.
For purposes of this section 14.5, any Person becoming a Subsidiary of the
Holding Company after the date hereof shall be deemed, at the time it becomes a
Subsidiary, to have incurred all of its then outstanding Funded Debt and Current
Debt, and any Person extending, refinancing, refunding or renewing any Funded
Debt or Current Debt shall be deemed to have incurred such Funded Debt or
Current Debt, as the case may be, at the time of such extension, refinancing,
refunding or renewal.
14.6. Limitation on Restricted Payments; Payments on Seller Notes.
(a) Neither Company will, and neither Company will permit any of their
respective Subsidiaries to, directly or indirectly, make or commit to make
any Restricted Payment; provided that the Holding Company may acquire
shares of Common Stock for an aggregate purchase price not to exceed
$3,000,000 if, both at the time of each such purchase and immediately after
giving effect thereto, (i) Consolidated Net Worth shall be not less than
$44,000,000 and (ii) no Default or Event of Default shall have occurred and
be continuing.
(b) Neither Company will, and neither Company will permit any of their
respective Subsidiaries to, make any payment or prepayment in respect of
the Seller Notes if such payment or prepayment is prohibited by the
subordination provisions of the Seller Notes.
14.7. Certain Financial Covenants. The Companies will, and will cause
their respective Subsidiaries to:
(a) Fixed Charge Coverage Ratio. Maintain at the end of each fiscal quarter
of the Holding Company specified below in this section 14.7(a) a ratio of
(i) (x) Consolidated EBITDA for the most recently completed four fiscal
quarters of the Holding Company (provided that, if such four fiscal quarter
period includes either or both of the fiscal quarters ending on March 31,
1996 or June 30, 1996, Consolidated EBITDA shall be calculated by using Pro
Forma EBITDA for each such fiscal quarter in such four fiscal quarter
period) less (y) the sum of (A) Consolidated Capital Expenditures made
during such period plus (B) the aggregate amount of federal, state, local
and foreign taxes paid by the Holding Company and its Subsidiaries during
such period to (ii) the sum of (w) cash interest payable by the Holding
Company and its Subsidiaries on Consolidated Indebtedness during such
period, plus (x) cash rentals payable under Capital Leases during such
period, plus (y) principal amounts of Consolidated Funded Debt and Current
Debt payable by the Holding Company and its Subsidiaries during such
period, plus (z) the aggregate purchase price paid by the Holding Company
and its Subsidiaries during such period to purchase Common Stock of the
Holding Company of not less than the ratio set forth below for such period
(provided that if such four fiscal quarter period includes either or both
of the fiscal quarters ending on March 31, 1996 or June 30, 1996, (i)
Capital Expenditures for such four fiscal quarter period shall be the
lesser of (A) the product of actual Capital Expenditures made during such
period since the Closing Date multiplied by a fraction the numerator of
which is four and the denominator of which is the number of fiscal quarters
that have elapsed since the Closing Date and (B) $14,000,000, (ii) interest
expense for such four fiscal quarter period shall be the product of the
actual amount of interest expense payable during such period since the
Closing Date multiplied by a fraction the numerator of which is four and
the denominator of which is the number of fiscal quarters that have elapsed
since the Closing Date and (iii) aggregate taxes paid during such four
fiscal quarter period shall be the product of the actual taxes paid during
such period since the Closing Date multiplied by a fraction the numerator
of which is four and the denominator of which is the number of fiscal
quarters have elapsed since the Closing):
Four Fiscal Quarters Ending Ratio
12/31/96 .............................. 1.01
3/31/97 ............................... 1.01
6/30/97 ............................... 1.01
9/30/97 ............................... 1.01
12/31/97 .............................. 1.01
3/31/98 ............................... 1.01
6/30/98 ............................... 1.01
9/30/98 ............................... 1.01
12/31/98 .............................. 1.01
3/31/99 and the last day of
each fiscal quarter thereafter ........ 1.15x
(b) Consolidated Indebtedness Ratio. Maintain at the end of each
fiscal quarter of the Holding Company specified below in this section
14.7(b) a Consolidated Indebtedness Ratio for such date of not more than
the ratio set forth below for such period:
Four Fiscal Quarters Ending Ratio
9/30/96 ............................... 5.50x
12/31/96 .............................. 5.50x
3/31/97 ............................... 5.25x
6/30/97 ............................... 5.25x
9/30/97 ............................... 4.75x
12/31/97 .............................. 4.75x
3/31/98 ............................... 4.25x
6/30/98 ............................... 4.25x
9/30/98 ............................... 4.25x
12/31/98 .............................. 4.25x
3/31/99 and the last day of
each fiscal quarter thereafter ........ 3.75x
(c) Senior Debt to EBITDA Ratio. Maintain at the end of each fiscal quarter
of the Holding Company specified below in this section 14.7(c) a ratio of (i)
Consolidated Senior Debt outstanding on the last day of such fiscal quarter to
(ii) Consolidated EBITDA for the most recently completed four fiscal quarters of
the Holding Company (provided that, if such four fiscal quarter period includes
any or all of the fiscal quarters ending on December 31, 1995, March 31, 1996 or
June 30, 1996, Consolidated EBITDA shall be calculated by using Pro Forma EBITDA
for each such fiscal quarter in such four fiscal quarter period), of not more
than the ratio set forth below for such period:
Four Fiscal Quarters Ending Ratio
9/30/96 ............................... 4.00x
12/31/96 .............................. 4.00x
3/31/97 ............................... 4.00x
6/30/97 ............................... 4.00x
9/30/97 ............................... 3.50x
12/31/97 .............................. 3.50x
3/31/98 ............................... 3.00x
6/30/98 ............................... 3.00x
9/30/98 ............................... 3.00x
12/31/98 .............................. 2.75x
3/31/99 and the last day of
each fiscal quarter thereafter ........ 2.50x
(d) Net Worth. Maintain at all times an excess of Consolidated Total Assets
over Consolidated Total Liabilities of not less than (i) $34,000,000 plus (ii)
50% of positive Consolidated Net Income (without adjustment for any loss) during
the period after June 30, 1996 to and including each date of determination
computed on a cumulative basis for said entire period.
14.8. Limitation on Investments. Neither Company will, and neither Company
will permit any of their respective Subsidiaries to, directly or indirectly,
make or hold any Investment in any Person other than:
(a) Investments by the Holding Company, the Operating Company and their
respective Subsidiaries in their Subsidiaries outstanding on the date hereof and
additional Investments in Wholly-Owned Subsidiaries in an aggregate amount
invested from the date hereof not to exceed $6,000,000 (provided that, not more
than an aggregate amount of $4,000,000, may be invested from the date hereof in
Foreign Subsidiaries);
(b) (i) loans to employees of the Holding Company and its Subsidiaries in
connection with purchases of stock of the Holding Company pursuant to the PSC
Stock Option Plans in an aggregate principal amount not to exceed $1,000,000 at
any time outstanding and (ii) loans and advances to employees in the ordinary
course of business of the Holding Company, the Operating Company and their
respective Subsidiaries as presently conducted in an aggregate principal amount
not to exceed $1,000,000 at any time outstanding;
(c) Investments by the Holding Company, the Operating Company and their
respective Subsidiaries in Cash Equivalents;
(d) Investments by the Holding Company, the Operating Company and their
respective Subsidiaries in Hedge Agreements permitted under section 14.11(c);
(e) Investments consisting of intercompany debt permitted by section 14.5
(b);
(f) Investments (i) existing on the date hereof and described on Exhibit
5.9 attached hereto or (ii) otherwise disclosed on such Exhibit 5.9; and
(g) other Investments in an aggregate amount invested not to exceed
$3,000,000; provided that with respect to Investments made under this clause
(g); (i) any newly acquired or created Subsidiary of the Holding Company, the
Operating Company or any of their respective Subsidiaries shall be a
Wholly-Owned Subsidiary Guarantor, (ii) immediately before and after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing or would result therefrom; and (iii) any business acquired or
invested in pursuant to this clause (g) shall be in the same general line of
business as the Holding Company, the Operating Company or any of
their respective Subsidiaries.
14.9. Limitation on Liens. Neither Company will, and neither Company will
permit any of their respective Subsidiaries to, create or suffer to exist any
Lien in respect of any property of any character (whether owned on the date
hereof or hereafter acquired) other than:
(a) any Lien created pursuant to the Bank Credit Documents securing
Funded Debt or Current Debt or other obligations of the Companies under the
Bank Credit Agreement or any Guarantee thereof by any Subsidiary, in each
case to the extent such Funded Debt or Current Debt or Guaranty is
permitted under section 14.5;
(b) Permitted Liens;
(c) any Lien existing on the date hereof and referred to on Exhibit
5.9 attached hereto;
(d) purchase money Liens upon or in real property or equipment
acquired or held by the Holding Company, the Operating Company or any of
their respective Subsidiaries in the ordinary course of business to secure
the purchase price of such property or equipment or to secure Funded Debt
and/or Current Debt incurred solely for the purpose of financing the
acquisition, construction or improvement of any such property or equipment
to be subject to such Liens, or Liens existing on any such property or
equipment at the time of acquisition (other than any such Liens created in
contemplation of such acquisition that do not secure the purchase price),
or extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount; provided that (i) no such Lien shall extend to or
cover any property other than the property or equipment being acquired,
constructed or improved, and no such extension, renewal or replacement
shall extend to or cover any property not theretofore subject to the Lien
being extended, renewed or replaced and (ii) any Funded Debt and/or Current
Debt secured by Liens permitted by this clause (d) shall be permitted under
section 14.5(a)(v);
(e) Liens arising in connection with Capital Leases permitted under
section 14.5(a)(v); provided that no such Lien shall extend to or cover any
properties or assets other than the properties and assets subject to such
Capital Leases; and
(f) the replacement, extension or renewal of any Lien permitted by
clauses (c) through (e) above upon or in the same property theretofore
subject thereto or the replacement, extension or renewal (without increase
in the amount or change in any direct or contingent obligor) of the Funded
Debt and/or Current Debt secured thereby.
In no event shall there be any Liens securing the Seller Notes.
14.10. Limitation on Transactions with Affiliates. Neither Company will,
and neither Company will permit any of their respective Subsidiaries to, engage
in any transaction (including, without limitation, the purchase, sale or
exchange of any properties and assets or the rendering of any services) with an
Affiliate of either Company or of any of their respective Subsidiaries on terms
less favorable to either Company or any such Subsidiary in any material respect
than would be obtainable at the time in comparable transactions with a Person
not such an Affiliate.
14.11. Limitation on Rental Obligations; Capital Expenditures; Hedge
Agreements. Neither Company will, and neither Company will permit any of their
respective Subsidiaries to:
(a) create, incur, assume or suffer to exist any obligations as lessee (i)
for the rental or hire of real or personal property in connection with any sale
and leaseback transaction or (ii) for the rental or hire of other real or
personal property of any kind under leases or agreements to lease including
Capital Leases having an original term of one year or more that would cause the
Consolidated Rental Obligations in respect of all such obligations to exceed
$4,000,000 payable in any period of 12 consecutive months; or
(b) make any Capital Expenditures in any period set forth below that would
cause the aggregate of all such Capital Expenditures made by the Companies and
their respective Subsidiaries in such period to exceed the amount set forth
below for such period:
Fiscal Quarter Ending Amount
Closing Date through 12/31/96 .............. $8,000,000
Fiscal year ending 12/31/97 ................ 14,000,000
Fiscal year ending 12/31/98 ................ 17,000,000
Fiscal year ending 12/31/99 ................ 20,000,000
Fiscal year ending 12/31/2000 .............. 21,000,000
Fiscal year ending 12/31/2001
and each fiscal year ending thereafter ..... 17,000,000
; or
(c) engage in any transaction involving commodity options or futures
contracts or any similar speculative transactions except for the Hedge
Agreements permitted under Section 5.01(p) of the Bank Credit Agreement.
14.12. Limitation on Issuance of Shares of Subsidiaries. The Holding
Company will not permit any of its Subsidiaries to (a) issue, sell or otherwise
dispose of any Shares (or any securities convertible into or exercisable or
exchangeable for Shares) of such Subsidiary except to either Company or
(b) except pursuant to the consummation of a transaction permitted under section
14.15, sell, transfer or otherwise dispose of any Shares (or any securities
convertible into or exercisable or exchangeable for Shares) of any other
Subsidiary of either Company except to either Company. Each Company will not, in
any event, permit any Subsidiary of such Company to have outstanding any
Preferred Shares. The Holding Company shall at all times remain the sole owner
of all outstanding shares of capital stock of the Operating Company and all
options or warrants to acquire the same.
14.13. Limitation on Subsidiary's Consolidation or Merger. The Holding
Company will not permit any of its Subsidiaries to consolidate with or merge
into any other Person, provided that (a) any Subsidiary (other than the
Operating Company) may consolidate with or merge into any Wholly-Owned
Subsidiary Guarantor if the resulting or surviving Person of such consolidation
or merger is a Wholly-Owned Subsidiary Guarantor and is not a Foreign
Subsidiary, (b) any Foreign Subsidiary may consolidate with or merge into any
other Foreign Subsidiary if the resulting or surviving Person of such
consolidation or merger is a Wholly-Owned Subsidiary and (c) any Subsidiary
(other than the Operating Company) may merge into the Holding Company if the
Holding Company is the surviving Person of such merger; provided, further, that
in each case on the date of such consolidation or merger and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing.
14.14. Limitation on Holding Company's Consolidation or Merger. The Holding
Company will not consolidate with or merge into any other Person, provided that
any Subsidiary (other than the Operating Company) may merge into the Holding
Company if the Holding Company is the surviving Person of such merger and if on
the date of such merger and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing.
14.15. Limitation on Disposition of Property. Neither Company will, and
neither Company will permit any of their respective Subsidiaries to, directly or
indirectly, sell, lease or otherwise dispose of (including by way of merger,
consolidation or other business combination) any of their respective properties
and assets (or any right, title or interest therein), whether real, personal or
mixed, tangible or intangible, including, without limitation, Shares, securities
or Indebtedness of any Subsidiaries of either Company, except for:
(a) sales by the Companies and their respective Subsidiaries of
inventory in the ordinary course of business consistent with prudent
business practice; and
(b) other sales by the Companies and their respective Subsidiaries of
properties and assets for consideration in any fiscal year in an aggregate
amount not to exceed $2,000,000, provided that in the case of this section
14.15(b), on the date of each such disposition and after giving effect
thereto, (i) no Default or Event of Default shall have occurred and be
continuing and (ii) the Companies shall be permitted to become liable in
respect of at least $1 of additional Funded Debt or Current Debt under
section 14.5(a)(v); and
(c) sales by the Companies and their respective Subsidiaries of
properties and assets in excess of the limitations set forth in section
14.15(b), provided that in the case of this section 14.15(c), on the date
of each such disposition and after giving effect thereto, (i) no Default or
Event of Default shall have occurred and be continuing, (ii) the Companies
shall be permitted to become liable in respect of at least $1 of additional
Funded Debt or Current Debt under section 14.5(a)(v), and (iii) the
aggregate fair market value (determined in each case as of the date of
disposition) of all properties and assets disposed of pursuant to section
14.15(b) and this section 14.15(c) by the Companies and their respective
Subsidiaries (A) since the beginning of the then current fiscal year of the
Holding Company is less than 10% of Consolidated Total Assets as at the
last day of the most recently completed fiscal year of the Holding Company
and (B) since the Closing Date is less than 30% of Consolidated Total
Assets as at the last day of the most recently completed fiscal year of the
Holding Company.
A disposition of (x) property made by any Subsidiary to either Company or (y)
obsolete assets in the ordinary course of business consistent with prudent
business practice shall be disregarded for purposes of this section 14.15.
14.16. Modification of Certain Documents, Agreements and Instruments.
Neither Company will, and neither Company will permit any of their respective
Subsidiaries to:
(a) file any resolution of its board of directors (or other governing
body) with the Secretary of State of the jurisdiction of its organization
if such resolution is related to the issuance of Preferred Shares or if the
effect thereof is, or could reasonably be expected to be, adverse to the
interests of any holder of any of the Securities;
(b) have a fiscal year which ends on any date other than the last day
of December; or
(c) amend, modify, supplement or waive any term, condition or
provision of its Organizational Documents or any of the agreements,
documents or instruments referred to in section 4.3, including, without
limitation, the Acquisition Documents and the Bank Credit Documents, or any
Refinancing Agreement or enter into any Refinancing Agreement or any other
agreement, document or instrument or transaction, if the effect thereof is,
or could reasonably be expected to be, adverse to the interests of any
holder of any of the Securities or to impose restrictions upon the right
and obligation of the Companies to make payments on the Notes or to pay the
Put Price under section 12 that are more restrictive in any material
respect than those set forth in its Organizational Documents or such other
agreements, documents and instruments as in effect on the Closing Date.
Without limiting the generality of the foregoing, neither Company will, and
neither Company will permit any of their respective Subsidiaries to, amend,
supplement, modify or waive any term of the Bank Credit Documents or any
Refinancing Agreement or enter into any Refinancing Agreement if the effect
of any such amendment, supplement, modification, waiver or entering into
would be that, after giving effect thereto, (i) any of the terms of the
Superior Indebtedness relating to the amount of or timing of any payment
(or prepayment) of the principal of, premium, if any, or interest on any
Superior Indebtedness differs from the terms of the Superior Indebtedness
prior to giving effect thereto, (ii) the rate of interest payable on any of
the Superior Indebtedness increases, (iii) the aggregate amount of Superior
Indebtedness increases to an amount greater than the amount of Superior
Indebtedness permitted under the definition of Superior Indebtedness, or
(iv) any of the terms and provisions of any covenant or agreement, the
breach of which constitutes or would constitute a Material Default,
changes.
14.17. Further Assurances; Release of Note Guarantees.
(a) From time to time hereafter, the Companies will execute and
deliver, or will cause to be executed and delivered, such additional
agreements, documents and instruments and will take all such other actions
as any holder or holders of the Notes may reasonably request for the
purpose of implementing or effectuating the provisions of the Operative
Documents.
(b) Without limiting the generality of the foregoing, in the event
that either Company at any time or from time to time shall elect to
organize or acquire any Subsidiary (subject to the limitations set forth in
section 14.18), then and in each such case such Company will promptly (but
in any event not later than 20 days prior to consummating any such
transaction) notify each holder of the Notes and, not later than the date
upon which such transaction is consummated, will cause to be executed and
delivered, to the holder or holders of the Notes, one or more Note
Guarantees executed by such Subsidiary.
(c) In the event of a sale or other disposition to an unaffiliated
third party of all or substantially all of the assets of a Subsidiary that
has executed a Note Guarantee, such Subsidiary or the corporation acquiring
such assets, as applicable, will be released and relieved of any
obligations under the applicable Note Guarantee, provided that such sale or
other disposition is permitted under this Agreement and the Other
Securities Purchase Agreements, including, without limitation, section
14.15 hereof and thereof.
14.18. Additional Subsidiaries. Notwithstanding anything to the contrary
set forth herein, without the prior written consent of the Required Holders of
the Notes, neither Company shall organize or acquire any Subsidiary unless at
the time of any such organization or acquisition such Subsidiary shall execute
and deliver to each holder of any Notes a Note Guarantee.
14.19 Limitation on Tax Consolidation. Neither Company will, and neither
Company will permit any of their respective Subsidiaries to, become a party to a
consolidated or combined income tax return with any Person other than the
Companies and their respective Subsidiaries.
15. Definitions. Note: Bracketed items are cross-references to the section or
sections of this Agreement in which the specified definitions are used; they
appear for purpose of convenience only and do not affect the meaning of such
definitions.
15.1. Definitions of Capitalized Terms. The terms defined in this section
15.1, whenever used in this Agreement, shall, unless the context otherwise
requires, have the following respective meanings:
"Accrued Bankruptcy Interest" shall have the meaning specified in section
10.
"Acquisition", "Acquisition Agreement", "Acquisition Corp." and
"Acquisition Documents" shall have the respective meanings specified in section
4.3.
"Affiliate" of any Person shall mean any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
first-mentioned Person, or any individual, in the case of a Person who is an
individual, who has a relationship by blood, marriage or adoption to such
first-mentioned Person not more remote than first cousin, and, without limiting
the generality of the foregoing, shall include (a) any Person beneficially
owning or holding 5% or more of any class of Voting Stock or other Shares of
such first-mentioned Person or (b) any Person of which such first-mentioned
Person owns or holds 5% or more of any class of Voting Stock or other Shares;
provided that, for purposes hereof, in no event shall you or any other
institutional holder of Securities be deemed to be an Affiliate of either
Company. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of Voting Stock or by
contract or otherwise.
"Bank Credit Agreement", "Bank Credit Documents" and "Banks" shall have the
respective meanings specified in section 4.3.
"Bankruptcy Code" shall have the meaning specified in section 10.
"Business" shall have the meaning specified in section 5.4.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day which shall be in Boston, Massachusetts or New York, New York a legal
holiday or a day on which banking institutions therein are authorized by law to
close.
"Capital Expenditures" of any Person shall mean any payment made, directly
or indirectly, by such Person for the purpose of acquiring or constructing fixed
assets, real property or improvements or equipment which, in accordance with
GAAP, would be added as a debit to the fixed asset account of such Person,
including, without limitation, any payment made under any Capital Lease or any
conditional sale or other title retention agreement.
"Capital Lease" shall mean any lease or similar arrangement which is of
such a nature that payment obligations of the lessee or obligor thereunder are
required to be capitalized and shown as liabilities upon a balance sheet of such
lessee or obligor prepared in accordance with GAAP or for which the amount of
the asset and liability thereunder as if so capitalized should be disclosed in a
note to such balance sheet.
"Cash Equivalents" shall mean any of the following, to the extent owned by
the Holding Company or any of its Subsidiaries free and clear of all Liens other
than Liens created under the Bank Credit Documents: (a) readily marketable
direct obligations of the government of the United States of America or any
agency or instrumentality thereof or obligations unconditionally guaranteed by
the full faith and credit of the government of the United States of America
having a maturity not later than 360 days from the date of issuance thereof, (b)
insured certificates of deposit of or time deposits having a maturity not later
than 360 days from the date of issuance thereof with any commercial bank that is
a member of the Federal Reserve System, issues (or the parent of which issues)
commercial paper rated as described in clause (c), is organized under the laws
of the United States of America or any state thereof and has combined capital
and surplus of at least $1 billion or (c) commercial paper having a maturity not
later than 180 days from the date of issuance thereof in an aggregate amount of
no more than $2,500,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any state of the United States of
America and rated at least "Prime-1" (or the then equivalent grade) by Moody's
Investors Service, Inc. or "A-1" (or the then equivalent grade) by Standard &
Poor's Ratings Group.
"Closing" and "Closing Date" shall have the respective meanings specified
in section 3.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency from time to time administering the Securities Act and/or the
Exchange Act.
"Common Stock" shall mean the Common Stock, $0.01 par value, of the Holding
Company as constituted on the Closing Date and any Shares into which such Common
Stock shall have been changed or any Shares resulting from any reclassification
of the Common Stock.
"Companies" shall mean the Holding Company and the Operating Company
collectively.
"Consolidated Indebtedness Ratio" shall mean, at any date, the ratio of
Consolidated Indebtedness on the last day of the most recently completed fiscal
quarter of the Holding Company to Consolidated EBITDA for the most recently
completed four fiscal quarters of the Holding Company (provided that, if such
four fiscal quarter period includes any or all of the fiscal quarters ending on
December 31, 1995, March 31, 1996 or June 30, 1996, Consolidated EBITDA shall be
calculated by using the Pro Forma EBITDA for each such fiscal quarter in such
four fiscal quarter period).
"Consolidated EBITDA" [14.7], "Consolidated Funded Debt"
[14.7],"Consolidated Indebtedness" [14.7], "Consolidated Interest Charges"
[14.7], "Consolidated Interest Expense" [14.7], "Consolidated Net Income"
[14.7], "Consolidated Rental Obligations" [14.7, 14.11] "Consolidated Senior
Debt" [14.7], "Consolidated Total Assets" [14.7, 14.15] and "Consolidated Total
Liabilities" [14.7] shall mean the EBITDA, Funded Debt, Indebtedness, Interest
Charges, Interest Expense, Net Income, Rental Obligations, Senior Debt, Total
Assets and Total Liabilities, as the case may be, of the Holding Company and its
Subsidiaries (whether or not ordinarily consolidated in consolidated financial
statements of the Holding Company and Subsidiaries), all consolidated in
accordance with GAAP, and after giving appropriate effect to outside minority
interests, if any, in Subsidiaries, provided that in determining Consolidated
Net Income there shall be excluded (a) the Net Income of any Person (other than
a Subsidiary of the Holding Company) in which the Holding Company or any
Subsidiary of the Holding Company has an ownership interest, except to the
extent that any such Net Income has been actually received by the Holding
Company or such Subsidiary in the form of dividends or similar distributions,
(b) any undistributed Net Income of a Subsidiary of the Holding Company which
for any reason is unavailable for distribution to the Holding Company or any
other Subsidiary of the Holding Company, (c) the Net Income of any Person
accrued prior to the date it becomes a Subsidiary of the Holding Company or is
merged into or consolidated with the Holding Company or a Subsidiary of the
Holding Company, (d) in the case of a successor to the Holding Company by
consolidation, merger or transfer of assets, the Net Income of such successor
accrued prior to such consolidation, merger or transfer, (e) any deferred or
other credit representing the excess of the equity in any Subsidiary of the
Holding Company at the date of acquisition thereof over the cost of the
investment in such Subsidiary and (f) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of income accrued during the same period.
"Current Debt" of any Person shall mean, at any date, without duplication,
(a) all Indebtedness for borrowed money or in respect of Capital Leases or the
deferred purchase price of property (including, without limitation, Indebtedness
of the kind referred to in clauses (b), (c), (d) and (e) of the definition of
Indebtedness), whether or not interest bearing, of such Person at such date
which would, in accordance with GAAP, be classified as short-term Indebtedness
at such date, but specifically excluding the current maturities of such Person's
Funded Debt, (b) all Guarantees by such Person at such date of Current Debt of
others and (c) the aggregate amount which is due on or before the expiration of
one year from such date in respect of any Redeemable Shares of such Person.
"Current Market Price" shall have the meaning specified in section 12.
"Default" shall mean any condition or event which constitutes or, after
notice or lapse of time or both, would constitute an Event of Default.
"EBITDA" of any Person shall mean, for any period, the Net Income of such
Person for such period after restoring thereto amounts deducted for (a) Interest
Charges, (b) taxes in respect of income and profits, and (c) amortization and
depreciation, in each case determined in accordance with GAAP, excluding, in the
case of the fiscal quarter in which the Acquisition is consummated, any
restructuring charge taken by the Holding Company and its Subsidiaries in
connection with the Acquisition.
"Environmental Laws" shall mean any law, statute, rule, regulation or other
governmental standard or requirement relating or pertaining to (a) the
generation, manufacture, management, handling, use, sale, transportation,
treatment, storage, disposal, delivery, discharge, release or emission of any
waste, pollutant or toxic, hazardous or other substance, or (b) any other act,
omission or condition affecting or involving the environment or air or water
pollution or soil or groundwater contamination.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and rulings thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) that, together with either Company, would be treated as a single
employer under section 4001(b) of ERISA, or that is a member of a group of which
either Company is a member and that is a controlled group within the meaning of
section 4971(e)(2)(B) of the Code.
"Event of Default" shall have the meaning specified in section 16.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
"Fair Value" shall have the meaning specified in section 12.
"Foreign Subsidiary" shall mean each of the following: (a) each Subsidiary
of the Holding Company identified as such on Exhibit 5.2 attached hereto and (b)
each Subsidiary of the Holding Company which is organized under the laws of a
jurisdiction other than the United States of America or any state thereof.
"Funded Debt" of any Person shall mean, at any date, without duplication,
(a) all Indebtedness for borrowed money or in respect of Capital Leases or the
deferred purchase price of property (including, without limitation, Indebtedness
of the kind referred to in clauses (b), (c), (d) and (e) of the definition of
Indebtedness), whether or not interest-bearing, of such Person which would, in
accordance with GAAP, be classified as long-term Indebtedness at such date, but
in any event including all such Indebtedness, whether secured or unsecured, of
such Person which matures (or which, pursuant to the terms of a revolving credit
agreement or otherwise, is directly or indirectly renewable or extendible at the
option of such Person for a period ending) more than one year after the date of
the creation thereof, notwithstanding the fact that payments in respect thereof
(whether installment, serial maturity or sinking fund payments or otherwise) are
required to be made by such Person not more than one year after the date as of
which the amount of Funded Debt is being determined, other than any amount
thereof which is at the time included in Current Debt of such Person, (b) all
Guarantees by such Person at such date of Funded Debt of others and (c) the
aggregate amount which is due more than one year from such date in respect of
any Redeemable Shares of such Person.
"GAAP" shall mean generally accepted accounting principles as in effect in
the United States from time to time, consistently applied.
"Guarantee" of any Person shall mean, at any date, any obligation of such
Person at such date guaranteeing, directly or indirectly, any Indebtedness,
liability or other obligation of any other Person in any manner, but in any
event including all endorsements (other than for collection or deposit in the
ordinary course of business), all discounts with recourse and all obligations
incurred through an agreement, contingent or otherwise, (a) to purchase the
obligations of any other Person or any security therefor or to advance or supply
funds for the payment or purchase of such obligations, or (b) to purchase, sell
or lease (as lessee or lessor) property, products, materials or supplies or to
purchase or sell transportation or services, primarily for the purpose of
enabling the obligor to make payment of such obligations or to assure the owner
of such obligations against loss, regardless of the delivery or non-delivery of
the property, products, materials or supplies or the furnishing or nonfurnishing
of the transportation or services, or (c) to provide funds for the payment of,
or obligating such Person to make, any loan, advance, capital contribution or
other investment in the obligor for the purpose of assuring a minimum equity,
asset base, working capital or other balance sheet condition for any date or to
provide funds for the payment of any obligation, dividend or stock liquidation
payment, or otherwise to supply funds to or in any manner invest in the obligor.
The amount of any Guarantee shall be equal to the amount of all Indebtedness,
liabilities and other obligations directly or indirectly guaranteed thereby.
"Hedge Agreements" shall mean interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements of the Companies and
their respective Subsidiaries.
"Holding Company" shall mean PSC Inc., a New York corporation, and any
successor thereto.
"Indebtedness" of any Person shall mean, at any date, all indebtedness,
liabilities and other obligations of such Person at such date (other than items
of shareholders' equity) which would, in accordance with GAAP, be classified as
liabilities of such Person, but in any event including (without duplication):
(a) all Guarantees of such Person;
(b) all indebtedness, liabilities and other obligations secured by any
Lien in respect of property owned by such Person, whether or not such
Person has assumed or become liable for the payment of such obligations;
(c) all indebtedness, liabilities and other obligations of such Person
arising under any conditional sale or other title retention agreement,
whether or not the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property;
(d) the amount of the obligation required to be recorded by the lessee
in respect of any Capital Lease under which such Person is lessee; and
(e) all indebtedness, liabilities and other obligations arising in
connection with letters of credit, bankers acceptances or other credit
enhancement facilities and Hedge Agreements.
"Indemnified Costs" and "Indemnitee" shall have the respective meanings
specified in section 21.
"Indemnified Person" shall have the meaning specified in section 11.5.
"Interest Charges" of any Person shall mean, for any period, the aggregate
amount of all interest paid, payable or guaranteed during such period by such
Person in respect of Funded Debt and Current Debt, including, without
limitation, Rental Obligations on Capital Leases, determined in accordance with
GAAP.
"Interest Expense" of any Person shall mean, for any period, Interest
Charges of such Person for such period net of interest income for such period,
whether paid or accrued, and including, without limitation, (a) commissions,
discounts and other fees and charges payable in connection with letters of
credit and (b) the net payment, if any, payable in connection with Hedge
Agreements less the net credit, if any, received in connection with Hedge
Agreements.
"Investment" of any Person shall mean any investment made by such Person in
any other Person by stock purchase, capital contribution, loan, advance,
acquisition of Indebtedness, Guarantee or otherwise.
"Licenses" shall mean certificates of public convenience and necessity,
franchises, licenses and other permits and authorizations from governmental
authorities.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, lien (statutory or otherwise), preference, priority, security
interest, chattel mortgage or other charge or encumbrance of any kind, or any
other type of preferential arrangement, including, without limitation, the lien
or retained security title of a conditional vendor and any easement, right of
way or other encumbrance on title to real property and any lease having
substantially the same effect as any of the foregoing.
"Make Whole Amount" shall mean, at any date, with respect to any prepayment
or payment (whether on account of acceleration or otherwise) of any Notes (but
excluding any prepayment of Notes pursuant to section 9.3), if the Treasury Rate
plus 200 basis points at such date is lower than 11.25%, the excess of (x) the
present value of the principal and interest payments on and in respect of the
Notes being prepaid or paid, as the case may be, that would otherwise become due
and payable (without giving effect to such prepayment or payment) (including the
final payment on the maturity date of the Notes), discounted at a rate which is
equal to the Treasury Rate plus 200 basis points over (y) the principal amount
of the Notes being prepaid or paid, as the case may be, at par. If the Treasury
Rate plus 200 basis points at the date of such prepayment or payment is equal to
or higher than 11.25% per annum, the Make Whole Amount is zero.
"Material Adverse Change" shall mean a material adverse change in or effect
upon any of (a) the condition (financial or otherwise), business, performance,
operations, properties, profits or prospects of the Operating Company and its
Subsidiaries taken as one enterprise, the Holding Company and its Subsidiaries
taken as one enterprise or any of the material assets or liabilities acquired or
assumed pursuant to the Acquisition Agreement, (b) the legality, validity or
enforceability of this Agreement, the Securities or any of the other Operative
Documents, (c) the rights and remedies of any holder of Securities with respect
to the Securities or (d) the ability of the Holding Company, the Operating
Company or any of the other Material Subsidiaries to perform its obligations
under any of the Operative Documents and/or to comply with any of the terms
thereof applicable to it.
"Material Default" shall have the meaning specified in section 10.
"Material Subsidiary" shall mean, at any date of determination, (a) the
Operating Company and (b) any other Subsidiary which, in the case of this clause
(b), individually or together with its Subsidiaries, (i) accounted for 5% or
more of the consolidated gross revenues of the Holding Company and its
Subsidiaries, determined in accordance with GAAP, for the then most recently
completed period of four consecutive fiscal quarters of the Holding Company or
(ii) owns (or own) properties and assets (whether real, personal or mixed,
tangible or intangible) which have an aggregate fair market value equal to 5% or
more of the aggregate fair market value of the properties and assets owned by
the Holding Company and its Subsidiaries, determined in accordance with GAAP, as
at the end of the then most recently completed fiscal quarter of the Holding
Company.
"Merger" and "Merger Agreement" shall have the respective meanings
specified in section 4.3.
"Multiemployer Plan" shall mean any Plan that is a "multiemployer plan" as
defined in section 4001(a)(3) of ERISA.
"Net Income" of any Person shall mean, for any period, the net income (or
net loss), excluding all extraordinary, unusual, nonrecurring and/or
nonoperating items, of such Person for such period, determined in accordance
with GAAP.
"Note Guarantees" shall have the meaning specified in section 1.
"Notes" shall have the meaning specified in section 1.
"Obligors" shall have the meaning specified in section 10.
"Officers' Certificate" shall mean a certificate signed on behalf of each
Company by its Chief Executive Officer, its President or one of its Vice
Presidents and its Chief Financial Officer, Treasurer or one of its Assistant
Treasurers.
"Operating Company" shall mean SpectraScan, Inc., a Delaware corporation,
and any successor thereto.
"Operative Documents" shall mean this Agreement, the Other Securities
Purchase Agreements, the Securities, and each of the other agreements, documents
and instruments executed in connection herewith and therewith, each as it may
from time to time be amended, modified or supplemented.
"Organizational Documents" of any Person shall mean such Person's charter
and by-laws, partnership agreement, operating agreement, trust agreement, as
applicable, and/or any other similar agreement, document or instrument.
"Other Securities Purchase Agreements" and "Other Purchasers" shall have
the respective meanings specified in section 1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permissible Securities" shall have the meaning specified in section 10.
"Permitted Liens" shall mean such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar Liens
arising in the ordinary course of business securing obligations that are not
overdue for a period of more than 30 days; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations; and (d) easements, rights of way and other
encumbrances on title to real property that do not render title to the property
encumbered thereby unmarketable or materially adversely affect the use of such
property for its present purposes.
"Person" shall mean an individual, a corporation, an association, a
joint-stock company, a business trust or other similar organization, a
partnership, a limited liability company, a joint venture, a trust, an
unincorporated organization or a government or any agency, instrumentality or
political subdivision thereof.
"Plan" shall mean an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by either Company or any ERISA Affiliate
or with respect to which either Company or any ERISA Affiliate may have any
liability.
"Preferred Shares", as applied to any Person, shall mean Shares of such
Person which shall be entitled to preference or priority over any other Shares
of such Person in respect of either the payment of dividends or the distribution
of assets upon liquidation.
"Pro Forma EBITDA" shall mean, for the fiscal quarters of the Holding
Company ending on December 31, 1995, March 31, 1996 and June 30, 1996, the
amount listed on Exhibit 15.1 attached hereto for such fiscal quarter.
"Proprietary Rights" shall mean any patents, registered and common law
trademarks, service marks, trade names, copyrights, licenses and other similar
rights (including, without limitation, know-how, trade secrets and other
confidential information) and applications for each of the foregoing, if any.
"PSC Stock Option Plans" shall mean the 1987 Stock Option Plan and the 1994
Stock Option Plan of the Holding Company.
"Publicly Traded" shall have the meaning specified in section 12.
"Put Closing Date", "Put Event", "Put Notice", "Put Price" and "Put
Securities" shall have the respective meanings specified in section 12.
"Redeemable" shall mean, with respect to any shares of any Person, each
share of such Person that is (a) redeemable, payable or required to be purchased
or otherwise retired or extinguished, or convertible into Funded Debt or Current
Debt of such Person, (i) at a fixed or determinable date, whether by operation
of any sinking fund or otherwise, (ii) at the option of any Person other than
such Person or (iii) upon the occurrence of a condition not solely within the
control of such Person or (b) convertible into other Redeemable shares.
"Refinancing Agreement" shall have the meaning specified in section 10.
"Registrable Shares" shall mean the Underlying Securities, except that, as
to any particular Registrable Shares, such securities, once issued, will cease
to be Registrable Shares when (a) a registration statement covering such
securities has been declared effective and such securities have been disposed of
pursuant to an effective registration statement or (b) such securities are sold
to the public in accordance with Rule 144 (or any similar provision then in
force) under the Securities Act. A Person shall be deemed to be a "holder of
Registrable Shares" for the purposes of section 11 if such Person is the holder
of any Warrants and/or any Underlying Securities.
"Registration Expenses" shall mean all fees, expenses and disbursements
related to any registration, qualification or compliance pursuant to section 11,
including, without limitation, all registration, filing, rating and listing
fees, blue sky fees and expenses, printing expenses, reasonable fees and
disbursements of counsel (including, without limitation, the fees, expenses and
disbursements of counsel for the holder or holders of the Registrable Shares),
and expenses of any special audits incident to or required by any registration,
qualification or compliance, except that Registration Expenses shall not include
any underwriters' discounts or commissions attributable to any Registrable
Shares registered and sold pursuant to any such registration.
"Rental Obligations" of any Person shall mean, for any period, all rents
and other amounts (including as such, all payments which such Person is
obligated to make to the lessor on termination of any lease and/or on surrender
of the leased property other than payments for which such Person is contingently
liable on account of early termination or breach of such lease) paid, payable or
guaranteed during such period by such Person, as lessee or sublessee under any
lease, including, without limitation, any amount required to be paid by such
Person (whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes, utilities and similar charges,
determined in accordance with GAAP. Whenever it is necessary to determine the
amount of Rental Obligations for any period, to the extent that such Rental
Obligations are not definitely determinable by the terms of the lease, the
Rental Obligations not so definitely determinable shall be estimated in good
faith and in such reasonable manner as the Chief Financial Officer of the
Holding Company may determine (as evidenced by a certificate of the Chief
Financial Officer promptly delivered to the holder or holders of the Notes).
"Required Holders" as applied to describe the requisite holder or holders
of any class of the Securities, shall mean, at any date, the holder or holders
of 75% or more in interest of such class of Securities at the time outstanding
(excluding all Securities at the time owned by either Company or any Affiliate
of either Company).
"Restricted Payment" as applied to any Person shall mean:
(a) any dividend or other distribution, direct or indirect, on account
of any Shares of such Person now or hereafter outstanding (including,
without limitation, Preferred Shares) or any securities convertible into or
exercisable or exchangeable for such Shares or any rights, options or
warrants to acquire any such Shares, except (i) any such dividend or
distribution payable to the Holding Company, the Operating Company and/or
any Wholly-Owned Subsidiary Guarantor and (ii) a pro rata distribution
payable to all of the stockholders of the Holding Company solely in shares
of Common Stock of the Holding Company and as a result of which there is no
change in the relative ownership interest of any stockholder in the Holding
Company or any of such stockholder's rights; and
(b) any redemption, retirement, purchase or other acquisition, direct
or indirect, of any Shares of such Person now or hereafter outstanding
(including, without limitation, Preferred Shares) or any securities
convertible into or exercisable or exchangeable for such Shares or any
rights, options or warrants to acquire any such Shares;
provided that, notwithstanding the foregoing, the term "Restricted Payment"
shall not include any dividend or other distribution paid on, or any redemption,
retirement, purchase or other acquisition of, or other payment in respect of,
any of the Securities.
"Scanning" shall have the meaning specified in section 4.3.
"Scanning Shares" shall have the meaning specified in section 4.3.
"Securities" shall mean the Notes, the Warrants and, unless the context
clearly requires otherwise, the Underlying Securities, each of which is a
"Security".
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Seller Notes" shall have the meaning specified in section 4.3.
"Sellers" shall have the meaning specified in section 4.3.
"Senior Debt" of any Person shall mean at any date, all Indebtedness of
such Person outstanding on such date under the Bank Credit Documents or any
Refinancing Agreement and any Hedge Agreements.
"Shares" of any Person shall include any and all shares of capital stock,
partnership interests, membership interests, or other shares, interests,
participations or other equivalents (however designated and of any class) in the
capital of, or other ownership interests in, such Person, and, as applied to the
Holding Company, includes Common Stock.
"Solvent" as applied to any Person at any date shall mean that on and as of
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities on and as of any date shall be computed as the
amount that, in the light of all the facts and circumstances existing on and as
of such date, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Source" shall have the meaning specified in section 26.
"Special Prepayment Premium" shall mean the premium payable concurrently
with each prepayment of Notes pursuant to section 9.3 (such premium being a
percentage of the principal amount so prepaid) applicable in accordance with the
following table depending upon the 12-month period in which such prepayment
occurs:
12-Month Period
Ending June 30, Premium
1997 ........................... 5%
1998 ........................... 5%
1999 ........................... 5%
2000 ........................... 4%
2001 ........................... 3%
2002 ........................... 2%
2003 ........................... 1%
2004 and thereafter ............ 0%
"Spectra-Physics" shall have the meaning specified in section 4.3.
"Spectra SA" shall have the meaning specified in section 4.3.
"Stock/Asset Purchase" shall have the meaning specified in section 4.3.
"Subordinated Indebtedness" shall have the meaning specified in section 10.
"Subsidiary" of any Person at any date shall mean (a) any other Person a
majority (by number of votes) of the Voting Stock of which is owned by such
first-mentioned Person and/or by one or more other Subsidiaries of such
first-mentioned Person and (b) any other Person with respect to which such
first-mentioned Person and/or any one or more other Subsidiaries of such
first-mentioned Person (i) is entitled to more than 50% of such Person's profits
or losses or more than 50% of such Person's assets on liquidation or (ii) holds
an equity interest in such Person of more than 50%. As used herein, unless the
context clearly required otherwise, the term "Subsidiary" refers to a Subsidiary
of the Holding Company.
"Superior Indebtedness" shall have the meaning specified in section 10.
"Total Assets" of any Person shall mean, at any date, the net book value of
the assets of such Person as would be shown on a balance sheet of such Person
prepared in accordance with GAAP.
"Total Liabilities" of any Person shall mean, at any date, the total amount
of the liabilities of such Person as would be shown on a balance sheet of such
Person prepared in accordance with GAAP.
"Treasury Rate" at any time with respect to any Notes being prepaid or paid
(whether on account of acceleration or otherwise), as the case may be, shall
mean and shall be determined by reference to the applicable display on Bloomberg
Financial Markets Service as of 10:00 A.M., Boston time, on the second Business
Day prior to the date fixed for such prepayment or payment (or, if such display
is no longer available, any publicly available source of similar market data),
and shall be the yield on actively traded United States Treasury securities
adjusted to a maturity equal to the then remaining Weighted Average Life to
Maturity of the Notes then being prepaid or paid (whether on account of
acceleration or otherwise) (the "Remaining Life"). If the Remaining Life is not
equal to the maturity of a United States Treasury security for which a yield is
given, the Treasury Rate shall be obtained by linear interpolation (calculated
to the nearest one-twelfth of a year) from the weekly average yields of the two
closest United States Treasury securities for which such yields are given,
except that if the Remaining Life is less than one year, the average yield on
actively traded United States Treasury securities adjusted to a constant
maturity of one year shall be used. The Treasury Rate shall be computed to the
fifth decimal place (one-thousandth of a percentage point) and then rounded to
the fourth decimal place (one-hundredth of a percentage point).
"TxCom" shall have the meaning specified in section 4.3.
"TxCom Shares" shall have the meaning specified in section 4.3.
"Underlying Securities" shall mean any Shares (or Other Securities (as
defined in the Warrants)) issued or issuable, as applicable upon exercise of any
Warrants, each of which is an "Underlying Security".
"Voting Stock", when used with reference to any Person, shall mean Shares
(however designated) of such Person having ordinary voting power for the
election of a majority of the members of the board of directors (or other
governing body) of such Person, other than Shares having such power only by
reason of the happening of a contingency.
"Warrants" shall have the meaning specified in section 1.
"Weighted Average Life to Maturity" of any Indebtedness or obligation shall
mean, at any date, the number of years obtained by dividing the then Remaining
Dollar-years of such Indebtedness or obligation by the then outstanding
principal amount of such Indebtedness or obligation. For purposes of this
definition, the "Remaining Dollar-years" of any Indebtedness or obligation shall
mean, at any date, the total of the products obtained by multiplying (a) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payment, including payment at final maturity, in respect thereof,
by (b) the number of years (calculated to the nearest one-twelfth) which will
elapse between such date and the making of such payment.
"Wholly-Owned Subsidiary" shall mean any Subsidiary all of the outstanding
Shares of which, other than directors' qualifying Shares, shall at the time be
owned by the Holding Company and/or by one or more other Wholly-Owned
Subsidiaries and the accounts of which are consolidated with those of the
Holding Company in accordance with GAAP.
"Wholly-Owned Subsidiary Guarantor" shall mean any Wholly-Owned Subsidiary
which has delivered to each holder of any Notes a valid, binding and enforceable
Note Guarantee.
"Withdrawal Liability" shall have the meaning given such term under Part 1
of Subtitle E of Title IV of ERISA.
15.2. Other Definitions. The terms defined in this section 15.2, whenever
used in this Agreement, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified.
"this Agreement" (and similar references to any of the other Operative
Documents) shall mean, and the words "herein" (and "therein"), "hereof" (and
"thereof"), "hereunder" (and "thereunder") and words of similar import shall
refer to, such instruments as they may from time to time be amended, modified or
supplemented.
a "class" of Securities shall refer to the Notes, the Warrants and/or the
Underlying Securities, as the case may be, each of which is a separate class.
"corporation" shall include an association, joint stock company, business
trust or other similar organization.
"premium" when used in conjunction with references to principal of and
interest on the Notes, shall mean any amount due upon any payment or prepayment
of any of the Notes, other than principal and interest and shall include the
Make Whole Amount and the Special Prepayment Premium.
"qualification" or "compliance" as used in section 11 refer to the
qualification or compliance of all Registrable Shares included in any
registration pursuant to section 11 under all applicable blue sky or other state
securities laws.
"register", "registered" and "registration" as used in section 11 refer to
a registration effected by filing a registration statement in compliance with
the Securities Act to permit the sale and disposition of the Registrable Shares
and any amendment filed or required to be filed to permit any such disposition.
15.3. Accounting Terms and Principles; Laws.
(a) All accounting terms used herein which are not expressly defined
in this Agreement shall have the respective meanings given to them in
accordance with GAAP, all computations made pursuant to this Agreement
shall be made in accordance with GAAP and all financial statements shall be
prepared in accordance with GAAP.
(b) All references herein to laws, statutes, rules and regulations
shall, unless the context clearly requires otherwise, be deemed to refer to
any law, statute, rule, regulation and any other governmental restriction,
standard and/or requirement promulgated, issued and/or enforced by any
domestic or foreign federal, state or local government, governmental
agency, authority, court, instrumentality or regulatory body, including,
without limitation, those of the United States of America or any state
thereof or the District of Columbia.
16. Remedies.
16.1. Events of Default Defined; Acceleration of Maturity. If any one or
more of the following events ("Events of Default") shall occur (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that is to say:
(a) if default shall be made in the due and punctual payment of all or
any part of the principal of, or premium (if any) on, any Note when and as
the same shall become due and payable, whether at the stated maturity
thereof, by notice of or demand for prepayment, or otherwise;
(b) if default shall be made in the due and punctual payment of any
interest on any Note when and as such interest shall become due and payable
and such default shall have continued for a period of five Business Days;
(c) if default shall be made in the performance or observance of any
covenant, agreement or condition contained in sections 7(g), 8, 9.7, 12,
13, 14.2(b) or 14.5 to 14.19, inclusive;
(d) if default shall be made in the performance or observance of any
other of the covenants, agreements or conditions contained in this
Agreement or any of the other Operative Documents and such default shall
have continued for a period of 30 days after the earlier to occur of (i)
either Company's obtaining actual knowledge of such default or (ii) either
Company's receipt of written notice of such default;
(e) if the Holding Company or any Material Subsidiary of the Holding
Company shall make a general assignment for the benefit of creditors, or
shall not pay its debts as they become due, or shall admit in writing its
inability to pay its debts as they become due, or shall file a voluntary
petition in bankruptcy, or shall be adjudicated bankrupt or insolvent, or
shall file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, or shall
file any answer admitting or not contesting the material allegations of a
petition filed against it in any such proceeding, or shall seek or consent
to or acquiesce in the appointment of any trustee, custodian, receiver,
liquidator or fiscal agent for it or for all or any substantial part of its
properties, or shall (or its directors or stockholders shall) take any
action looking to its dissolution or liquidation;
(f) if, within 30 days after the commencement of an action against the
Holding Company or any Material Subsidiary of the Holding Company seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such action shall not have been dismissed or all orders or
proceedings thereunder affecting the operations or the business of the
Holding Company or such Material Subsidiary stayed, or if the stay of any
such order or proceeding shall thereafter be set aside, or if, within 30
days after the appointment without the consent or acquiescence of the
Holding Company or such Material Subsidiary of any trustee, custodian,
receiver, liquidator or fiscal agent for the Holding Company or any
Material Subsidiary of the Holding Company or for all or any substantial
part of their respective properties, such appointment shall not have been
vacated;
(g) if, under the provisions of any law for the relief or aid of
debtors, any court or governmental agency of competent jurisdiction shall
assume custody or control of the Holding Company or of any Material
Subsidiary of the Holding Company or of all or any substantial part of
their respective properties and such custody or control shall not be
terminated or stayed within 30 days from the date of assumption of such
custody or control;
(h) if (i) the Holding Company or any Subsidiary of the Holding
Company shall fail to (A) make any payment due on any Indebtedness (other
than the Notes and other than the Indebtedness under the Bank Credit
Documents (or any Refinancing Agreement)) or other obligation (including
any in respect of any lease or any Shares upon the exercise by any Person
of any put or call option or other similar right of redemption or
repurchase with regard to such Shares in accordance with the terms of such
option or right), if the aggregate outstanding amount thereof (and of any
other Indebtedness or other obligation as to which the Holding Company or
any Subsidiary is in default) exceeds $2,000,000 or (B) perform, observe or
discharge any covenant, condition or obligation in any agreement, document
or instrument evidencing, securing or relating to such Indebtedness or
other obligation, if the effect of any such failure of the character
described in this clause (i) is to cause, or permit any other Person to
cause, any payment in respect thereof in an aggregate amount of $2,000,000
or more to become due and payable, or (ii) any such Indebtedness or other
obligation or any Indebtedness or other obligation under the Bank Credit
Documents (or any Refinancing Agreement) in aggregate amount of $2,000,000
or more shall be accelerated or shall become due and payable by its terms
and shall not be paid or extended;
(i) if a final judgment for the payment of money which, together with
all other outstanding final judgments for the payment of money against the
Holding Company and/or any of its Subsidiaries, exceeds an aggregate of
$2,000,000 shall be rendered by a court of record against the Holding
Company or any Subsidiary, and the Holding Company or such Subsidiary shall
not discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereof within 30 days from the date
of entry thereof and within such period of 30 days, or such longer period
during which execution of such judgment shall have been stayed, move to
vacate such judgment or appeal therefrom and cause the execution thereof to
be stayed pending determination of such motion or during such appeal;
(j) if any representation or warranty made by or on behalf of the
Holding Company or any Subsidiary of the Holding Company in this Agreement
or in any of the other Operative Documents or in any agreement, document or
instrument delivered under or pursuant to any provision hereof or thereof
shall prove to have been materially false or incorrect on the date as of
which made;
(k) if, at any time, this Agreement or any of the other Operative
Documents shall for any reason (other than the scheduled termination
thereof in accordance with its terms) expire, fail to be in full force and
effect or be disaffirmed, repudiated, cancelled, terminated or declared to
be unenforceable, null and void;
(l) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under section
4042 of ERISA to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified either Company or any ERISA Affiliate that a
Plan may become a subject of any such proceedings, (iii) the aggregate
"amount of unfunded benefit liabilities" (within the meaning of section
4001(a)(18) of ERISA) under all Plans, determined in accordance with Title
IV of ERISA, shall exceed $250,000, (iv) either Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) either
Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or
(vi) either Company or any Subsidiary of either Company establishes or
amends any employee welfare benefit plan that provides post-employment
welfare benefits in a manner that would increase the liability of either
Company or any Subsidiary of either Company thereunder; and any such event
or events described in clauses (i) through (vi) above, either individually
or together with any other such event or events, has resulted in, or could
reasonably be expected to result in a Material Adverse Change; or
(m) if (i) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Commission under the Exchange Act), directly or indirectly, of Voting Stock
of the Holding Company (or other securities convertible into such Voting
Stock) representing 30% or more of the combined voting power of all Voting
Stock of the Holding Company; (ii) during any period of up to 24
consecutive months, commencing before or after the date of this Agreement,
individuals who at the beginning of such 24-month period were directors of
the Holding Company shall cease for any reason to constitute a majority of
the board of directors of the Holding Company; or (iii) any Person or two
or more Persons acting in concert shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, the power to
exercise, directly or indirectly, a controlling influence over the
management or policies of the Holding Company;
then, in the case of an Event of Default of the character described in
subdivisions (a), (b), (c), (d), (h), (i), (j), (k), (l) or (m) of this section
16.1 and at the option of the holder or holders of 25% or more in aggregate
principal amount of the Notes at the time outstanding (excluding any Notes at
the time owned by either Company or any Affiliate of either Company), exercised
by written notice to the Operating Company, the principal of all Notes shall
forthwith become due and payable, together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Operating Company shall forthwith upon any
such acceleration pay to the holder or holders of all the Notes then outstanding
(i) the entire principal of and interest accrued on the Notes, and (ii) in
addition, to the extent permitted by applicable law, an amount equal to the Make
Whole Amount as liquidated damages and not as a penalty; provided that, in the
case of an Event of Default of the character described in subdivisions (a) or
(b) of this section 16.1 and irrespective of whether all of the Notes have been
declared due and payable by the holder or holders of 25% or more in aggregate
principal amount of the Notes at the time outstanding, any holder of Notes who
or which has not consented to any waiver with respect to such Event of Default
may, at the option of such holder, by written notice to the Operating Company,
declare all Notes then held by such holder to be, and such Notes shall thereupon
become, forthwith due and payable, together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Operating Company shall forthwith upon any
such acceleration pay to such holder (i) the entire principal of and interest
accrued on such Notes, and (ii) in addition, to the extent permitted by
applicable law, an amount equal to the Make Whole Amount as liquidated damages
and not as a penalty; provided, further, that, in the case of an Event of
Default of the character described in subdivisions (e), (f) or (g) of this
section 16.1, the principal of all Notes shall forthwith become due and payable,
together with interest accrued thereon (including any interest accruing after
the commencement of any action or proceeding under the federal bankruptcy laws,
as now or hereafter constituted, or any other applicable domestic or foreign
federal or state bankruptcy, insolvency or other similar law, and any other
interest that would have accrued but for the commencement of such proceeding,
whether or not any such interest is allowed as an enforceable claim in such
proceeding), without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, and the Operating Company shall
forthwith upon any such acceleration pay to the holder or holders of all the
Notes then outstanding (i) the entire principal of and interest accrued on the
Notes, and (ii) in addition, to the extent permitted by applicable law, an
amount equal to the Make Whole Amount as liquidated damages and not as a
penalty.
Notwithstanding the foregoing provisions, at any time after the occurrence
of any Event of Default and of notice thereof, if any, by any holder or holders
of Notes and before any judgment, decree or order for payment of the money due
has been obtained by or on behalf of any holder or holders of the Notes, the
Required Holders of the Notes by written notice to the Operating Company, may
rescind and annul such Event of Default and/or notice of such Event of Default
and the consequences thereof with respect to all of the Notes (including any
Notes which were accelerated pursuant to the first proviso in the preceding
paragraph by any holder or holders on account of an Event of Default of the
character described in subdivision (a) or (b) of this section 16.1) if:
(1) the Operating Company has paid a sum sufficient to pay
(A) all overdue installments of interest on all Notes at the rate
specified in the Notes;
(B) the principal of (and premium, if any, on) any Notes which have
become due otherwise than by such Event of Default or notice thereof and
interest thereon at the rate specified in such Notes; and
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate specified in such Notes; and
(2) all Defaults and Events of Default, other than the non-payment of the
principal of Notes which have become due solely by such acceleration, have been
cured or waived as provided in section 19.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
16.2. Suits for Enforcement, etc. Subject to the provisions of section 10,
in case any one or more of the Events of Default specified in section 16.1 shall
have occurred, and irrespective of whether any Notes have become or have been
declared immediately due and payable under section 16.1, the holder of any Note
may proceed to protect and enforce its rights either by suit in equity or by
action at law, or both. The Companies stipulate that the remedies at law of the
holder or holders of the Securities in the event of any default or threatened
default by either Company in the performance of or compliance with any covenant
or agreement in this Agreement or any of the other Operative Documents are not
and will not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance
thereof, whether by an injunction against a violation thereof or otherwise.
Without limiting the generality of the foregoing (and without derogating from
any provision contained in this Agreement or any of the other Operative
Documents), upon the occurrence and during the continuance of an Event of
Default, the Required Holders of each class of Securities shall have the right
to apply for and have a receiver appointed for each of the Companies and their
respective Subsidiaries, or any one or more of them, by a court of competent
jurisdiction in any action taken by any such holders to enforce their respective
rights and remedies hereunder and under the other Operative Documents in order
to manage, protect and preserve the assets of the Companies and their respective
Subsidiaries and continue the operation of the business of the Companies and
their respective Subsidiaries, or to sell or dispose of the assets of the
Companies and their respective Subsidiaries, and to collect all revenues and
profits thereof and apply the same to the payment of all expenses and other
charges of such receivership, including the compensation of the receiver, and
the Companies hereby consent to such appointment without regard to the existence
of any misfeasance or malfeasance or the presence of any defenses that would
otherwise be available to such application.
16.3. Remedies Cumulative. No remedy conferred in this Agreement or in any
of the other Operative Documents upon the holder of any Security 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
thereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
16.4. Remedies Not Waived. No course of dealing between either Company and
any of their respective Subsidiaries, on the one hand, and any holder of any
Security, on the other hand, and no delay by any such holder in exercising any
rights hereunder or under any of the other Operative Documents shall operate as
a waiver of any rights of any such holder.
16.5. Application of Payments. In case any one or more of the Events of
Default specified in section 16.1 shall have occurred, all amounts to be applied
to the prepayment or payment of any Notes, shall be applied, after the payment
of all related costs and expenses incurred by the holders of the Notes
(including, without limitation, reasonable compensation to any and all trustees,
liquidators, receivers or similar officials and reasonable fees, expenses and
disbursements of counsel) in such order of priority as is determined by the
Required Holders of the Notes.
17. Registration, Transfer and Exchange of Securities. Securities issued
hereunder shall be issued in registered form. The Companies shall keep at their
principal executive office (which is now located at the address set forth at the
beginning of this Agreement), registers in which they shall provide for the
registration and transfer of the Securities. The name and address of each holder
of the Securities shall be registered in such registers. The Companies shall
give to any institutional holder of any Security promptly (but in any event
within 10 days) following request therefor, a complete and correct copy of the
names and addresses of all registered holders of the Securities and the amount
and kind of Securities held by each. Whenever any Security or Securities shall
be surrendered for transfer or exchange, the applicable Company at its expense
will execute and deliver in exchange therefor a new Security or Securities (in
such denominations and registered in such name or names as may be requested by
the holder of the surrendered Security or Securities), in the same aggregate
unpaid principal amount (in the case of the Notes) or exercisable for the same
aggregate number of Shares (in the case of any Warrants) or in the same
aggregate number of Shares (in the case of any Underlying Security), as
applicable, as that of the Security or Securities so surrendered. The Companies
may treat the Person in whose name any Security is registered as the owner of
such Security for all purposes.
18. Replacement of Securities. Upon receipt by the Companies of reasonably
satisfactory evidence of the loss, theft, destruction or mutilation of any Note
or Warrant and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnity, and (in the case of mutilation) upon surrender of such
Note or Warrant, the applicable Company at its expense will execute and deliver
in lieu of such Note or Warrant a new Note or Warrant of like tenor and, in the
case of any new Note, dated so as not to result in any loss of interest. Your
unsecured agreement to indemnify and/or affidavit and that of any other
institutional holder shall constitute satisfactory indemnity and/or satisfactory
evidence of loss, theft or destruction for the purpose of this section 18.
19. Amendment and Waiver.
(a) Any term of this Agreement and, unless explicitly provided
otherwise therein, of any of the other Operative Documents may, with the
consent of the Companies, be amended, or compliance therewith may be
waived, in writing only, by the Required Holders of each class of
Securities entitled to the benefits of such term, provided that (i) without
the consent of the holders of all of the Notes at the time outstanding, no
such amendment or waiver shall (A) change the amount of the principal of or
any rate of interest on or the amount of any premium payable with respect
to any of the Notes or change the payment terms of any of the Notes, or,
except as provided in the Notes, subordinate the obligation of the Obligors
to pay any amount due on the Notes to any other obligation, or (B) change
the percentage of holders of Notes required to approve any such amendment,
effectuate any such waiver or accelerate payment of the Notes; (ii) without
the consent of the holders of all of the Warrants and Underlying Securities
at the time outstanding, no such amendment or waiver shall (A) modify any
of the provisions of section 11 or section 12, or (B) change the percentage
of holders of the Warrants and Underlying Securities required to approve
any such amendment or effect any such waiver; and (iii) no such amendment
or waiver shall extend to or affect any obligation not expressly amended or
waived or impair any right consequent thereon. Executed or true and correct
copies of any amendment, waiver or consent effected pursuant to this
section 19 shall be delivered by the Companies to each holder of Securities
forthwith (but in any event not later than five Business Days) following
the effective date thereof.
(b) The Companies will not, directly or indirectly, request or
negotiate for, or offer or pay any remuneration or grant any security as an
inducement for, any proposed amendment or waiver of any of the provisions
of this Agreement or any of the other Operative Documents unless each
holder of the Securities (irrespective of the kind and amount of Securities
then owned by it) shall be informed thereof by the Companies and, if such
holder is entitled to the benefit of any such provision proposed to be
amended or waived, shall be afforded the opportunity of considering the
same, shall be supplied by the Companies with sufficient information to
enable it to make an informed decision with respect thereto and shall be
offered and paid such remuneration and granted such security on the same
terms.
(c) In determining whether the requisite holders of Securities have
given any authorization, consent or waiver under this section 19, any
Securities owned by either Company or any of their respective Affiliates
shall be disregarded and deemed not to be outstanding.
20. Method of Payment of Securities. Irrespective of any provision hereof or of
the other Operative Documents to the contrary, so long as you or any other
institutional holder shall hold any Security, the Companies will make all
payments on such Security to you or such other institutional holder by the
method and at the address for such purpose specified in Schedule I attached
hereto or by such other method or at such other address as you or such
institutional holder may designate in writing (given as provided in section 23),
without requiring any presentation or surrender of such Security, except that if
any Security shall be paid, prepaid and/or repurchased in full, such Security
shall be surrendered to the applicable Company promptly following such payment,
prepayment or repurchase and cancelled.
21. Expenses; Indemnity. Whether or not the transactions contemplated by any of
the Operative Documents shall be consummated, the Companies, jointly and
severally, will pay or cause to be paid (or reimbursed, as the case may be) and
will defend, indemnify and hold you (and each other holder of any of the
Securities) and each of your (and such other holder's) directors, officers,
employees, agents, advisors and Affiliates (each, an "Indemnitee") harmless (on
an after tax basis) in respect of all costs, losses, expenses (including,
without limitation, the reasonable fees, costs, expenses and disbursements of
counsel) and damages (collectively, "Indemnified Costs") incurred by or asserted
against any Indemnitee in connection with the negotiation, execution, delivery,
performance and/or enforcement of this Agreement or any of the other Operative
Documents (including, without limitation, so-called work- outs and/or
restructurings and all amendments, waivers and consents hereunder and
thereunder, whether or not effected) and/or the consummation of the transactions
contemplated hereby and thereby or which may otherwise be related in any way to
this Agreement or any other Operative Documents or such transactions or such
Indemnitee's relationship to either Company or any of their respective
Affiliates or any of their respective properties and assets, including, without
limitation, any and all Indemnified Costs related in any way to the requirements
of any Environmental Laws (as the same may be amended, modified or supplemented
from time to time) or to any environmental investigation, assessment, site
monitoring, containment, clean up, remediation, removal, restoration, reporting
and sampling, whether or not consented to, or requested or approved by, any
Indemnitee, and whether or not such Indemnified Cost is attributable to an event
or condition originating from any properties or assets of either Company or any
of their respective Subsidiaries or any other properties previously or hereafter
owned, leased, occupied or operated by either Company or any of their respective
Subsidiaries. Notwithstanding the foregoing, the Companies shall have any
obligation to an Indemnitee under this section 21 with respect to any
Indemnified Cost which is finally determined by a court of competent
jurisdiction to have arisen solely and directly as a result of the willful
misconduct or bad faith of such Indemnitee.
22. Taxes. The Companies jointly and severally will pay all taxes and fees
(including interest and penalties), including, without limitation, all issuance
and documentary stamp and similar taxes, which may be payable in respect of the
execution and delivery of this Agreement and each of the other Operative
Documents.
23. Communications. All communications provided for herein and, unless
explicitly provided otherwise therein, in any of the other Operative Documents
shall be in writing and sent (a) by telecopy if the sender on the same day sends
a confirming copy of such communication by a recognized overnight delivery
service (charges prepaid), (b) by a recognized overnight delivery service
(charges prepaid), or (c) by messenger. Any such communication must be sent (i)
if to either Company (or any Subsidiary of either Company), to such Company (or
such Subsidiary) at:
PSC Inc.
675 Basket Road
Webster, New York 14580
Attention: William J. Woodard
Telecopy No.: (716) 265-6409
with a copy (which shall not constitute notice) to:
Boylan, Brown, Code, Fowler, Vigdor & Wilson, LLP
2400 Chase Square
Rochester, New York 14604
Attention: Martin S. Weingarten, Esq.
Telecopy No.: (716) 232-3528
or at such other address (or telecopy number) as may be furnished in writing by
the Companies to each holder of any Security and (ii) if to you, at your address
for such purpose set forth in Schedule I attached hereto, with a copy (which
shall not constitute notice) to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Frank B. Porter, Jr., Esq.
Telecopy No.: (617) 248-4000
and if to any other holder of any Security, at the address of such holder as it
appears on the applicable register maintained pursuant to section 17, or at such
other address as may be furnished in writing by you or by any other holder to
the Companies. Communications under this section 23 shall be deemed given only
when actually received.
24. Survival of Agreements, Representations and Warranties, etc. All agreements,
representations and warranties contained herein and in the other Operative
Documents shall be deemed to have been relied upon by you and shall survive the
execution and delivery of this Agreement and each of the other Operative
Documents, the issue, sale and delivery of the Securities and payment therefor
and any disposition of the Securities by you, whether or not any investigation
at any time is made by you or on your behalf. All indemnification provisions,
including, without limitation, those contained in sections 11.5, 21 and 22,
shall survive the date upon which none of the Securities shall be outstanding
and the termination of this Agreement and each of the other Operative Documents.
25. Successors and Assigns; Rights of Other Holders. This Agreement and, unless
explicitly provided otherwise therein, each of the other Operative Documents
shall bind and inure to the benefit of and be enforceable by the Companies and
you, successors to each Company and your successors and assigns, and, in
addition, shall inure to the benefit of and be enforceable by each holder from
time to time of any Securities who, upon acceptance thereof, shall, without
further action, be entitled to enforce the applicable provisions and enjoy the
applicable benefits hereof and thereof. The Companies may not assign any of
their respective rights or obligations hereunder or under any of the other
Operative Documents without the written consent of the Required Holders of each
class of Securities then outstanding.
26. Purchase for Investment; ERISA.
(a) You represent and warrant (i) that you have been furnished with
all information that you have requested for the purpose of evaluating your
proposed acquisition of the Securities to be issued to you pursuant hereto
and (ii) that you will acquire such Securities for your own account for
investment and not for distribution in any manner that would violate
applicable securities laws, but without prejudice to your rights to dispose
of such Securities or a portion thereof to a transferee or transferees, in
accordance with such laws if at some future time you deem it advisable to
do so. The acquisition of such Securities by you at the Closing shall
constitute your confirmation of the foregoing representations and
warranties. You understand that such Securities are being sold to you in a
transaction which is exempt from the registration requirements of the
Securities Act, and that, in making the representations and warranties
contained in section 5.16, the Companies are relying, to the extent
applicable, upon your representations and warranties contained herein.
(b) You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used
by you to pay the purchase price of the Securities to be purchased by you
hereunder:
(i) the Source is an "insurance company general account" as
defined in Section V(e) of Prohibited Transaction Exemption ("PTE")
95- 60 (issued July 12, 1995) and, except as you have disclosed to the
Companies in writing pursuant to this section (i), the amount of
reserves and liabilities for the general account contract(s) held by
or on behalf of any employee benefit plan or group of plans maintained
by the same employer or employee organization do not exceed 10% of the
total reserves and liabilities of the general account (exclusive of
separate account liabilities) plus surplus as set forth in the NAIC
Annual Statement filed with the state of domicile of the insurer; or
(ii) the Source is a separate account of an insurance company
maintained by you in which an employee benefit plan (or its related
trust) has an interest, which separate account is maintained solely in
connection with your fixed contractual obligations under which the
amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in
any manner by the investment performance of the separate account; or
(iii) the Source is either (A) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (B) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
to the Companies in writing pursuant to this section (iii), no
employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account or collective
investment fund; or
(iv) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning
of Part V of the QPAM Exemption), no employee benefit plan's assets
that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained
by the same employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
person
controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in either Company and (A) the identity of such QPAM and
(B) the names of all employee benefit plans whose assets are included
in such investment fund have been disclosed to the Companies in
writing pursuant to this section (iv); or
(v) the Source is a governmental plan; or
(vi) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Companies in
writing pursuant to this section (vi); or
(vii) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this section 26(b), the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have
the respective meanings assigned to such terms in Section 3 of ERISA, and
the term "QPAM Exemption" means PTE 84-14 (issued March 13, 1984).
27. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and,
unless explicitly provided otherwise therein, each of the other Operative
Documents, including the validity hereof and thereof and the rights and
obligations of the parties hereunder and thereunder, and all amendments and
supplements hereof and thereof and all waivers and consents hereunder and
thereunder, shall be construed in accordance with and governed by the domestic
substantive laws of the State of New York without giving effect to any choice of
law or conflicts of law provision or rule that would cause the application of
the domestic substantive laws of any other jurisdiction. Each Company, to the
extent that it may lawfully do so, hereby consents to service of process, and to
be sued, in the State of New York and in The Commonwealth of Massachusetts and
consents to the jurisdiction of the courts of the State of New York and of The
Commonwealth of Massachusetts and of the United States District Courts for the
Southern District of New York and for the District of Massachusetts, as well as
to the jurisdiction of all courts to which an appeal may be taken from such
courts, for the purpose of any suit, action or other proceeding arising out of
any of its obligations hereunder or thereunder or with respect to the
transactions contemplated hereby or thereby, and expressly waives any and all
objections it may have as to venue in any such courts. Each Company further
agrees that a summons and complaint commencing an action or proceeding in any of
such courts shall be properly served and shall confer personal jurisdiction if
served personally or by certified mail to it at its address set forth in section
23 or as otherwise provided under the laws of the State of New York or The
Commonwealth of Massachusetts, as the case may be. Notwithstanding the
foregoing, each Company agrees that nothing contained in this section 27 shall
preclude the institution of any such suit, action or other proceeding in any
jurisdiction other than the State of New York or The Commonwealth of
Massachusetts. EACH COMPANY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN
ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH COMPANY IN
RESPECT OF ITS OBLIGATIONS HEREUNDER OR THEREUNDER OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
28. Rule 144A. Each Company will take, or will cause to be taken, such action as
any holder of Securities may reasonably request from time to time to facilitate
any sale or disposition by any such holder of any Securities without
registration under the Securities Act and/or any applicable securities laws
within the limitation of the exemptions provided by any rule or regulation
thereunder, including, without limitation, Rule 144A under the Securities Act.
29. Miscellaneous. The headings in this Agreement and in each of the other
Operative Documents are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof or thereof. This Agreement (together with
the other Operative Documents) embodies the entire agreement and understanding
among you and the Companies and supersedes all prior agreements and
understandings relating to the subject matter hereof. Each covenant contained
herein and in each of the other Operative Documents shall be construed (absent
an express provision to the contrary) as being independent of each other
covenant contained herein and therein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. If any provision in this Agreement or in any
of the other Operative Documents refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable, whether such action is taken directly or indirectly by such
Person, whether or not expressly specified in such provision. In case any
provision in this Agreement or any of the other Operative Documents shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
This Agreement and, unless explicitly provided otherwise therein, each of the
other Operative Documents, may be executed in any number of counterparts and by
the parties hereto or thereto, as the case may be, on separate counterparts but
all such counterparts shall together constitute but one and the same instrument.
[The remainder of this page is intentionally left blank.]
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal among you and the Companies. Please
then return one of such counterparts to the Companies.
Very truly yours,
PSC INC.
By: _____________________________
(Title)
SPECTRASCAN, INC.
By: _____________________________
(Title)
The foregoing Agreement is hereby
agreed to as of the date thereof.
[THE FOLLOWING ARE THE SIGNATURE
BLOCKS FOR EACH OF THE PURCHASERS
WHICH WILL APPEAR IN THE APPLICABLE
SECURITIES PURCHASE AGREEMENT
BETWEEN THE COMPANIES AND EACH
SUCH PURCHASER.]
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: ______________________________
(Title)
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By: ______________________________
(Title)
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: ______________________________
(Title)
LINCOLN NATIONAL INCOME FUND, INC.
By: ______________________________
(Title)
SECURITY-CONNECTICUT LIFE
INSURANCE COMPANY
By: Lincoln Investment Management, Inc.
Its Attorney-In-Fact
By: __________________________
(Title)
SECURITY-CONNECTICUT CORPORATION
By: Lincoln Investment Management, Inc.
Its Attorney-In-Fact
By: __________________________
(Title)
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: ______________________________
(Title)