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EXHIBIT 10.10
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SENIOR SUBORDINATED NOTE, WARRANT AND COMMON STOCK PURCHASE AGREEMENT
among
CUPERTINO ELECTRIC, INC.,
as Issuer
BANCAMERICA CAPITAL INVESTORS SBIC I, L.P.,
TA/ADVENT VIII L.P.,
TA/ATLANTIC AND PACIFIC IV L.P.,
TA EXECUTIVES FUND LLC,
TA INVESTORS LLC, and
TA SUBORDINATED DEBT FUND, L.P.
as Purchasers
and
JAMES S. RYLEY,
WALTER E. RYLEY,
EUGENE A. RAVIZZA,
CLARANNE R. LONG
THE CLARANNE RAVIZZA LONG TRUST
THE RAVIZZA CHILDREN'S TRUST II, and
THE RAVIZZA CHILDREN'S TRUST III
as Selling Shareholders
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Dated as of June 21, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS...................................................................... 2
1.01 Definitions.................................................................. 2
1.02 Accounting Terms; Financial Statements....................................... 16
ARTICLE II PURCHASE AND SALE OF NOTES AND WARRANTS......................................... 17
2.01 Purchase and Sale of Notes, Warrants and Common Stock........................ 17
2.02 Purchase Price............................................................... 17
2.03 Original Issue Discount...................................................... 17
2.04 Closing...................................................................... 18
ARTICLE III CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE........................ 18
3.01 Representations and Warranties............................................... 19
3.02 Compliance with this Agreement............................................... 19
3.03 Officer's Certificate........................................................ 19
3.04 Secretary's Certificates..................................................... 19
3.05 Transaction Documents; Mergers and Redemptions Documents;
Senior Credit Documents...................................................... 19
3.06 Financial Matters............................................................ 19
3.07 Contracts.................................................................... 20
3.08 Purchase Permitted by Applicable Laws........................................ 20
3.09 Consents and Approvals....................................................... 20
3.10 Investor Rights Agreement.................................................... 21
3.11 The Mergers and Redemptions.................................................. 21
3.12 No Material Adverse Change................................................... 21
3.13 Opinion of Counsel........................................................... 21
3.14 Disbursement Instructions.................................................... 21
3.15 Other Documents.............................................................. 21
3.16 Senior Credit Facility....................................................... 21
3.17 Due Diligence................................................................ 22
3.18 No Proceedings............................................................... 22
3.19 SBA Documents and Information................................................ 22
3.20 Stockholders Agreement....................................................... 22
3.21 Director Indemnification Agreements.......................................... 22
3.22 Insurance.................................................................... 22
3.23 Non-Competition Agreements................................................... 22
3.24 Shareholder Agreements Terminations.......................................... 22
ARTICLE IV CONDITIONS TO THE OBLIGATION OF THE COMPANY AND THE SELLING
SHAREHOLDERS TO CLOSE........................................................... 23
4.01 Representations and Warranties............................................... 23
4.02 Compliance with this Agreement............................................... 23
4.03 Issuance Permitted by Requirements of Laws................................... 24
4.04 Consents and Approvals....................................................... 24
4.05 Senior Credit Facility....................................................... 24
4.06 No Proceedings............................................................... 24
4.07 Shareholders Agreement....................................................... 24
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ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING THE SELLING SHAREHOLDERS............... 25
5.01 Authority.................................................................... 25
5.02 No Conflict.................................................................. 25
5.03 No Brokers' Fees............................................................. 25
5.04 Shares....................................................................... 25
5.05 Absence of Proceedings....................................................... 26
ARTICLE VI REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY............................ 26
6.01 Corporate Existence and Power Organization................................... 26
6.02 Authorization; No Conflict................................................... 26
6.03 Governmental Authorization; Third Party Consents............................. 27
6.04 Validity and Binding Nature.................................................. 27
6.05 Financial Condition.......................................................... 27
6.06 No Material Adverse Change................................................... 28
6.07 Litigation and Contingent Liabilities........................................ 28
6.08 Ownership of Properties; Liens............................................... 29
6.09 ERISA........................................................................ 29
6.10 Investment Company Act....................................................... 30
6.11 Public Utility Holding Company Act........................................... 30
6.12 Use of Proceeds.............................................................. 30
6.13 Taxes........................................................................ 30
6.14 Solvency, etc................................................................ 30
6.15 Environmental Matters........................................................ 30
6.16 Insurance.................................................................... 31
6.17 Real Property................................................................ 32
6.18 Information.................................................................. 32
6.19 Intellectual Property........................................................ 33
6.20 Burdensome Obligations; Disclosure........................................... 33
6.21 Labor Matters................................................................ 33
6.22 No Default................................................................... 34
6.23 [INTENTIONALLY RESERVED]..................................................... 34
6.24 [INTENTIONALLY RESERVED]..................................................... 34
6.25 Accounts Receivable.......................................................... 34
6.26 Capitalization............................................................... 34
6.27 Warranties................................................................... 35
6.28 Investments.................................................................. 35
6.29 Customers and Suppliers...................................................... 35
6.30 Transactions with Related Persons............................................ 35
6.31 Private Offering............................................................. 36
6.32 Contractual Obligation; Performance Bonds.................................... 36
6.33 Mergers and Redemptions Documents; Senior Credit Documents................... 37
6.34 Debt Agreements.............................................................. 37
6.35 Broker's, Finder's or Similar Fees........................................... 37
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS............................... 38
7.01 Authorization; No Contravention.............................................. 38
7.02 Binding Effect............................................................... 38
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7.03 Accredited Investor; Purchase for Own Account................................ 38
7.04 ERISA........................................................................ 39
7.05 Broker's, Finder's or Similar Fees........................................... 39
7.06 Governmental Authorization; Third Party Consent.............................. 39
7.07 Corporate Existence and Power................................................ 39
ARTICLE VIII FINANCIAL INFORMATION AND NOTICES............................................. 39
8.01 Financial Statements and Other Information (Pre-Note Payoff and
Public Offering)............................................................. 39
8.02 Financial Statements and Other Information................................... 41
ARTICLE IX AFFIRMATIVE COVENANTS........................................................... 43
9.01 Pre-Note Payoff and Public Offering.......................................... 43
9.02 Other Covenants.............................................................. 45
ARTICLE X NEGATIVE COVENANTS............................................................... 47
10.01 Limitations on Mergers; Consolidations; and Acquisitions..................... 47
10.02 [INTENTIONALLY RESERVED]..................................................... 47
10.03 Limitations on Indebtedness.................................................. 47
10.04 Limitations on Affiliate Transactions........................................ 48
10.05 Limitations on Distributions................................................. 48
10.06 Limitations on Disposition of Assets......................................... 49
10.07 Limitations on Investments................................................... 49
10.08 Limitations on Liens......................................................... 50
10.09 Limitations on Tax Consolidation............................................. 51
10.10 Limitations on Changes in Fiscal Year End.................................... 51
10.11 Limitations or Modifications of Transaction Documents, Senior Credit
Documents and Merger and Redemptions Documents............................... 51
10.12 Financial Covenants.......................................................... 52
10.13 Business Activities.......................................................... 53
10.14 Modification of Organizational Documents..................................... 53
ARTICLE XI REDEMPTION OF NOTES............................................................. 53
11.01 Optional Redemption of Notes................................................. 53
11.02 Mandatory Redemption of Notes................................................ 54
11.03 Notice of Redemption......................................................... 54
11.04 Allocation and Application of Payments....................................... 55
11.05 Notation of Partial Payments................................................. 55
ARTICLE XII SUBORDINATION OF NOTES......................................................... 55
12.01 Definitions.................................................................. 55
12.02 Subordination................................................................ 56
12.03 Subordination Upon Distribution of Assets.................................... 57
12.04 Prohibitions and Limitations on Payment...................................... 57
12.05 Limitation on Remedies....................................................... 58
12.06 Payments and Distributions Received.......................................... 59
12.07 Proofs of Claim.............................................................. 59
12.08 Subrogation.................................................................. 59
12.09 Relative Rights.............................................................. 60
12.10 Subordination Not Impaired; Benefit of Subordination......................... 60
12.11 Miscellaneous................................................................ 60
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12.12 Assignment of Notes.......................................................... 61
12.13 Legend....................................................................... 62
ARTICLE XIII EVENTS OF DEFAULT............................................................. 62
13.01 Events of Default............................................................ 62
13.02 Acceleration................................................................. 64
13.03 Set-Off...................................................................... 64
ARTICLE XIV INDEMNIFICATION................................................................ 65
14.01 Indemnification.............................................................. 65
14.02 Claims against the Company and its Subsidiaries.............................. 69
14.03 Set-Off...................................................................... 69
14.04 Interest..................................................................... 69
14.05 Other Indemnification Matters................................................ 70
ARTICLE XV MISCELLANEOUS................................................................... 70
15.01 Survival of Representations and Warranties and Covenants..................... 70
15.02 Notices...................................................................... 70
15.03 Payments..................................................................... 72
15.04 Assignments and Participation................................................ 72
15.05 Lost, Etc. Notes............................................................. 74
15.06 Amendments, Determinations, Requests or Consents............................. 75
15.07 Remedies Cumulative.......................................................... 75
15.08 Counterparts................................................................. 75
15.09 Headings..................................................................... 75
15.10 GOVERNING LAW................................................................ 75
15.11 Jurisdiction................................................................. 75
15.12 Waiver of Jury Trial......................................................... 76
15.13 Severability................................................................. 76
15.14 Rules of Construction........................................................ 76
15.15 Entire Agreement............................................................. 76
15.16 Certain Expenses............................................................. 76
15.17 Funding Fee.................................................................. 77
15.18 Publicity.................................................................... 77
15.19 Further Assurances........................................................... 77
15.20 Confidentiality.............................................................. 77
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EXHIBIT
Exhibit A Form of Note
Exhibit B Form of Warrant
Exhibit C Form of Investor Rights Agreement
Exhibit D First Merger Agreement
Exhibit E Post-Merger Redemptions Agreements
Exhibit F Pre-Merger Redemptions Agreements
Exhibit G Second Merger Agreement
Exhibit H Form of Shareholders Agreement
Exhibit I Form of Legal Opinion
Exhibit J Form of Director's Indemnification Agreement
Exhibit K Form of Non--Solicitation and Confidentiality Agreement
SCHEDULES
Schedule 2.01 Purchase and Sale of Notes, Warrants and Common Stock
Schedule 3.09 Consents Not Obtained
Schedule 5.04 Shares of Common Stock Owned by Selling Shareholders
Schedule 6.02(b) Compliance with Laws
Schedule 6.05(a)(1) April 30, 2000 and May 31, 2000 Financial Statements
Schedule 6.05(a)(2) Exceptions to GAAP
Schedule 6.05(b) Projections
Schedule 6.05(c) Pro-formas
Schedule 6.07 Litigation and Contingent Liabilities
Schedule 6.13 Taxes
Schedule 6.15 Environmental Matters
Schedule 6.16 Insurance
Schedule 6.17 Real Property
Schedule 6.21 Labor Relations
Schedule 6.25 Accounts Receivable
Schedule 6.26 Capitalization
Schedule 6.27 Warranties
Schedule 6.28 Investments
Schedule 6.29 Customers and Suppliers
Schedule 6.30 Transactions with Related Persons
Schedule 6.32(a) Contractual Obligations
Schedule 6.32(b) Performance Bonds
Schedule 6.34(a) Debt Agreements
Schedule 6.34(b) Liens
Schedule 6.35 Brokers
Schedule 10.03 Existing Indebtedness
Schedule 10.05 Shareholders' Agreements
Schedule 10.07 Investments
Schedule 10.08 Existing Liens
Schedule 14.01 Indemnification Percentages
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SENIOR SUBORDINATED NOTE,
WARRANT AND COMMON STOCK PURCHASE AGREEMENT
THIS SENIOR SUBORDINATED NOTE, WARRANT AND COMMON STOCK PURCHASE
AGREEMENT (this "Agreement") is dated as of June 21, 2000, by and among
CUPERTINO ELECTRIC, INC., a Delaware corporation formerly known as DELAWARE
SYNERGISM, INC. (the "Company"), BANCAMERICA CAPITAL INVESTORS SBIC I, L.P., a
Delaware limited partnership ("BancAmerica"), TA/ADVENT VIII L.P., a Delaware
limited partnership ("TA/Advent VIII"), TA/ATLANTIC AND PACIFIC IV L.P., a
Delaware limited partnership ("TA/AP IV"), TA EXECUTIVES FUND LLC, a Delaware
limited liability company ("TA Executives"), TA INVESTORS LLC, a Delaware
limited liability company ("TA Investors"), TA SUBORDINATED DEBT FUND, L.P., a
Delaware limited liability company ("TA Sub Debt," and together with TA/Advent
VIII, TA/AP IV, TA Executives, TA Investors and TA Sub Debt, collectively, "TA."
and together with BancAmerica, the "Purchasers"), James S. Ryley, Walter E.
Ryley, Eugene A. Ravizza, Claranne R. Long, the Claranne Ravizza Long Trust, the
Ravizza Children's Trust II and the Ravizza Children's Trust III (the "Selling
Shareholders")
Statement of Purpose
The Company was incorporated in Delaware as a wholly owned subsidiary of
Synergism, Inc., a California corporation ("Oldco"). Oldco had three other
operating Subsidiaries, each of which was a California corporation: Cupertino
Electric, Inc. ("Cupertino"), Cascade Controls, Inc. ("Cascade"), and Cupertino
Electronics, Inc. ("Electronics"). On June 16, 2000, Oldco was merged into the
Company. This merger is sometimes referred to in this Agreement as the "First
Merger." Immediately prior to the issuance of the Notes and the Warrants and the
sale of the Purchased Capital Stock as contemplated in this Agreement,
Cupertino, Cascade, and Electronics were each consolidated and merged into the
Company and the Company, as the surviving corporation of this merger, adopted
the Cupertino Electric, Inc., name. This merger is sometimes referred to in this
Agreement as the "Second Merger." The First and Second Merger are sometimes
referred to in this Agreement as the "Mergers".
Prior to the Second Merger, Cupertino redeemed 15,678 shares of its
common stock held by Walter E. Ryley, Cascade redeemed 2,196 of its shares of
common stock held by Dennis Antweiler and 1,106 of its shares of common stock
held by Robert Sinek, and Electronics redeemed 5,919 of its shares of common
stock held by Aaron Colton and 2,192 of its shares of common stock held by David
Duppong. The redemptions described in the preceding sentence are sometimes
referred to in this Agreement as the "Pre-Merger Redemptions." Immediately
following the completion of the Second Merger and the issuance of the Notes and
the Warrants and the sale of the Purchased Capital Stock as contemplated by this
Agreement, the Company will redeem 63,309 shares of its common stock held by
Eugene Ravizza, 48,060 of its shares of common stock held by Claranne Long,
75,406 of its shares of common stock held by the Claranne Ravizza Long Trust,
49,599 shares of its common stock held by the Ravizza Children's Trust II and
49, 599 shares of its common stock held by the Ravizza Children's Trust III. The
redemptions described in the preceding sentence are sometimes referred to in
this Agreement as the "Post-Merger Redemptions." The transactions
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described in this paragraph are sometimes referred to in this Agreement as the
"Permitted Redemptions" and, collectively with the Mergers, as the "Mergers and
Redemptions."
The Company proposes to issue to BancAmerica, TA Sub Debt and TA
Investors (collectively, the "Note Purchasers") 12.0% senior subordinated notes
in the aggregate principal amount of $35,000,000 and warrants to purchase shares
of Common Stock of the Company, and the Selling Shareholders and the Company
propose to sell shares of Common Stock to BancAmerica, TA/Advent VIII, TA/AP IV,
TA Executives, and TA Investors (collectively, the "Equity Purchasers"), in each
case as more particularly described herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Accounts Receivable" has the meaning assigned to it in Section 6.25.
"Acquisition" means any transaction or series or related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of all or
substantially all of any business or division of a Person, (b) the acquisition
of in excess of 50% of the capital stock, partnership interests, membership
interests or equity of any Person, or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary). "Acquire" shall have
a corresponding meaning.
"Acquired Indebtedness" means mortgage Indebtedness or Indebtedness with
respect to Capital Leases of a Person existing at the time such Person became a
Subsidiary of the Company or assumed by the Company or a Subsidiary of the
Company pursuant to an Acquisition permitted hereunder (and not created or
incurred in connection with or in anticipation of such Acquisition.).
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person; provided, that in no event shall any Purchaser (or
any Affiliate of any Purchaser) be deemed to be an Affiliate of the Company. For
purposes of this definition, a Person shall be deemed to control another Person
if (a) such Person possesses, directly or indirectly, the power to vote 5% or
more of the securities having ordinary voting power for the election of
directors or other managers of such other Person, (b) such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise or (c) such Person is a director,
officer, executor, trustee or fiduciary (or their equivalents) of the other
Person or a Person that controls such other Person.
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"Agreement" means this Senior Subordinated Note, Warrant and Common
Stock Purchase Agreement, as amended or supplemented from time to time.
"Asset Sale" means the sale, lease, assignment or other transfer for
value (each a "Disposition") by the Company or any Subsidiary thereof to any
Person (other than the Company or any Subsidiary thereof) of any asset or right
of the Company or such Subsidiary other than (a) the sale or lease of inventory
in the ordinary course of business, (b) Dispositions of equipment in the
ordinary course of business, so long as such equipment is replaced, within a
reasonable time, with like-kind equipment, (c) the sublease by the Company of
653 and 657 Harrison Street, San Francisco, California in effect on the Closing
Date and (d) other Dispositions in any fiscal year the net cash proceeds of
which do not in the aggregate exceed $1,000,000.
"BancAmerica" has the meaning assigned thereto in the initial paragraph
to this Agreement.
"Bonded Contract" has the meaning assigned thereto in Section 6.13(b).
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina or San Francisco,
California are authorized or required by law or executive order to close.
"Capital Expenditure" means all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of the Company.
"Capital Lease" means, with respect to any Person, any lease of (or
other agreement conveying the right to use) any real or personal property by
such Person, that, in conformity with GAAP, is accounted for as a capital lease
on the balance sheet of such Person.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such Person's capital stock, partnership interests, membership interests or
other equivalent equity interests and any rights, warrants or options
exchangeable for or convertible into such capital stock or other equity
interests.
"Cascade" has the meaning assigned thereto in the Statement of Purpose
of this Agreement.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one
year after such time, issued or guaranteed by the United States
Government;
(b) commercial paper, maturing not more than one year from the
date of issue, which is issued by
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(i) a corporation (except the Company or an Affiliate
thereof) organized under the laws of any State of the United
States of America or of the District of Columbia and rated at
least A-1 by Standard & Poor's Ratings Group or P-1 by Moody's
Investors Service, Inc., at the time of investment, or
(ii) any Lender (as defined in the Senior Credit
Agreement) or its holding company;
(c) any certificate of deposit or bankers' acceptance or
eurocurrency time deposit, maturing not more than one year after the
date of issue, which is issued by either
(i) a financial institution that is a member of the
Federal Reserve System and has a combined capital and surplus
and undivided profits of not less than $500,000,000, or
(ii) any Lender (as defined in the Senior Credit
Agreement); or
(d) any repurchase agreement with a term of one year of less
which
(i) is entered into with
(A) any Lender (as defined in the Senior Credit
Agreement), or
(B) any commercial banking institution of the
stature referred to in clause (c)(i),
(ii) is secured by a fully perfected Lien in any
obligation of the type described in any of clauses (a) through
(c), and
(iii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the
repurchase obligation of such Lender (as defined in the Senior
Credit Agreement) (or other commercial banking institution)
thereunder;
(e) investments in money market mutual funds registered with the
Commission meeting the requirements of Rule 2a-7 promulgated under the
Investment Company Act of 1940, as amended;
(f) participations in short-term loans to any corporation (other
than an Affiliate of the Company) organized under the laws of any state
of the United States or of the District of Columbia and rated at least
A-1 by Standard & Poor's Ratings Group or P-1 by Moody's Investors
Service, Inc.; or
(g) investments in short-term asset management accounts offered
by any Lender (as defined in the Senior Credit Agreement) for the
purpose of investing in loans to any corporation (other than an
Affiliate of the Company) organized under the laws of
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any state of the United States or of the District of Columbia and rated
at least A-1 by Standard & Poor's Ratings Group or P-1 by Moody's
Investors Service, Inc.
"Certificate of Incorporation" means the Certificate of Incorporation of
the Company, as amended or supplemented from time to time.
"CERCLA" has the meaning assigned thereto in Section 6.15.
"Change of Control" means (a) prior to the consummation of a Public
Offering resulting in Net Cash Proceeds in an amount equal to or greater than
$50,000,000, the Ryley Family and the Ravizza Family shall cease to collectively
(i) own and control the largest combined amount (both in number and in voting
power) of the outstanding voting securities of the Company, and together with
employees of the Company own and control at least 50% (both in number and in
voting power) of the outstanding voting securities of the Company, or (ii),
together with the Purchasers, have the right to elect a majority of the board of
directors of the Company and (b) from and after the consummation of a Public
Offering resulting in Net Cash Proceeds in an amount equal to or greater than
$50,000,000, (i) any Person or group of Persons (within the meaning of Section
13 or 14 of the Exchange Act and the rules promulgated thereunder, but excluding
any member of the Ryley Family or the Ravizza Family) shall acquire beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than 20% of the outstanding securities on a Fully Diluted basis of the
Company having voting rights in the election of directors under normal
circumstances or (ii) a majority of the members of the Board of Directors of the
Company shall cease to be Continuing Members.
"Class A Common Stock" means the Class A Common Stock, par value $.001
per share, as described in the Company Charter Documents.
"Class B Common Stock" means the Class B Common Stock, par value $.001
per share, as described in the Company Charter Documents.
"Closing" has the meaning assigned thereto in Section 2.04.
"Closing Date" has the meaning assigned thereto in Section 2.04.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means collectively (a) the Class A Common Stock and the
Class B Common Stock and (b) any other capital stock into which any of the
foregoing is reclassified or reconstituted.
"Company" has the meaning assigned thereto in the initial paragraph of
this Agreement.
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"Company Charter Documents" means the Certificate of Incorporation and
the bylaws of the Company, as amended or supplemented from time to time.
"Computation Period" means each period of four consecutive fiscal
quarters ending on the last day of a fiscal quarter.
"Consolidated Net Income" means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period, excluding any extraordinary gains and any gains
from discontinued operations.
"Continuing Member" means a member of the board of directors of the
Company who either (i) was a member of the board of directors of the Company on
the day before the consummation of a Public Offering resulting in Net Cash
Proceeds in an amount equal to or greater than $50,000,000 and was such
continuously thereafter or (ii) became a member of such board of directors after
such time and whose election or nomination for election was approved by a vote
of the majority of the Continuing Members then members of the Company's board of
directors.
"Contractual Obligation" means, as to any Person, any provision of any
securities issued by such Person or of any indenture or credit agreement or any
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound or to which it may be subject or under
which it has any rights or which is guaranteed by it.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Company or Oldco, are treated as a single employer under Section 414 of the Code
or Section 4001 of ERISA.
"Covenant Expiration Date" has the meaning assigned thereto in Section
8.02.
"Cupertino" has the meaning assigned thereto in the Statement of Purpose
of this Agreement.
"Current Assets" means, with respect to the Company, at any date, the
amount at which all of the current assets of the Company would be properly
classified as current assets shown on a balance sheet, determined on a
consolidated basis in accordance with GAAP.
"Designated Consideration" has the meaning assigned thereto in Section
10.01
"EBITDA" means, for any period, Consolidated Net Income for such period
plus, to the extent deducted in determining such Consolidated Net Income,
Interest Expense, cash income
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tax expense, depreciation and amortization for such period plus, with respect to
following fiscal quarters only, to the extent deducted in determining such
Consolidated Net Income, $5,000,000 with respect to the fourth fiscal quarter of
fiscal year 1999, $1,212,000 with respect to the first fiscal quarter of fiscal
year 2000 and $1,200,000 with respect to the second fiscal quarter of fiscal
year 2000, plus, to the extent the same are deducted in determining such
Consolidated Net Income and paid and expensed by the Company in such period,
fees and expenses (not to exceed $5,000,000 in the aggregate) of the Company in
connection with this Agreement, the Senior Credit Documents and the Mergers and
Redemptions Documents and the transactions contemplated hereby and thereby to
occur on the Closing Date (including the legal, placement, arrangement and
investment banking fees of the Company in connection therewith); provided that
for purposes of calculating EBITDA of the Company for any period, (i) the
consolidated net income (plus, to the extent deducted in calculating such
consolidated net income, interest expense, income tax expense, depreciation and
amortization) of any Person, or attributable to any division or similar business
unit, Acquired by the Company or any Subsidiary thereof during such period will
be included on a pro forma basis for such period (assuming the consummation of
each such Acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period, adjusted, to the
extent the same are approved by the Required Holders with respect to any
Acquisition, to add back non-recurring expenses in the nature of excess owner's
compensation in connection with the Person acquired in such Acquisition, but
without any other adjustment for potential cost savings or other synergies) if
(1) either (x) the audited consolidated balance sheet of such acquired Person
and its consolidated Subsidiaries as at the end of the fiscal year of such
Person preceding the Acquisition of such Person and the related audited
consolidated statements of income, stockholders' equity and cash flows for such
fiscal year have been provided to the Holders and have been reported on without
a qualification arising from the scope of the audit or a "going concern" or like
qualification or exception or (y) other comparable financial information has
been furnished to the Holders with respect to such period and such Acquisition
and information have been found acceptable by the Required Holders and (2)
either (x) any subsequent unaudited financial statements for such Person for the
period prior to the Acquisition of such Person were prepared on a basis
consistent with such audited financial statements, have been provided to the
Holders and have been reported on without a qualification arising from the scope
of the report or a "going concern" or like qualification or (y) other comparable
financial information has been furnished to the Holders with respect to such
period and such Acquisition and information have been found acceptable by the
Required Holders and (ii) the consolidated net income (plus, to the extent
deducted in calculating such consolidated net income, interest expense, income
tax expense, depreciation and amortization) of any Person, or attributable to
any division or similar business unit, disposed of by the Company or any
Subsidiary during such period will be excluded on a pro forma basis for such
period (assuming the consummation of each such disposition occurred on the first
day of such period). With respect to any Person or division or similar business
unit acquired in an Acquisition or disposed of, for purposes of Section 10.12(c)
the "EBITDA Adjustment" attributable to such Person, division or business unit
means (i) in the case of a Person or division or similar business unit acquired
in an Acquisition, the amount to be included in EBITDA pursuant to clause (i) of
the proviso to the immediately preceding sentence with respect to such Person,
division or business unit at the time such Acquisition is consummated and (ii)
in the case of a Person or division or similar business unit disposed of, the
amount to be excluded from
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EBITDA pursuant to clause (ii) of the proviso to the immediately preceding
sentence with respect to such Person, division or business unit at the time such
disposition is consummated.
"EBITDA Adjustment" -- see the definition of "EBITDA".
"Electronics" has the meaning assigned thereto in the Statement of
Purpose of this Agreement.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Company or any ERISA Affiliate or (b) has at any time within the preceding six
years been maintained for the employees of the Company or any current or former
ERISA Affiliate.
"Environmental Claims" means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
"Environmental Laws" means all present or future federal, state or local
laws, statutes, common law duties, rules regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to Environmental Matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company or any Subsidiary directly or
indirectly resulting from or based upon (i) violation of any Environmental Law,
(ii) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Substances, (iii) exposure to any Hazardous
Substances, (iv) the release or threatened release of any Hazardous Substances
into the environment or (v) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.
"Environmental Matters" means any matter arising out of or relating to
employee health and occupational safety, or pollution or protection of the
environment or workplace, including any of the foregoing relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, release, control or cleanup of any Hazardous
Substance.
"Equity Purchasers" has the meaning assigned thereto in the initial
paragraph of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person who together with the Company is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Event of Default" has the meaning assigned thereto in Section 13.01
hereof.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Family" means, with respect to a specified individual, the individual,
such individual's spouse and former spouses, any other individual who is related
to the specified individual or such individual's spouse within the third degree,
and any other individual who resides with the specified individual.
"Final Maturity Date" has the meaning assigned thereto in Section 11.02.
"First Merger" has the meaning assigned thereto in the Statement of
Purpose of this Agreement.
"First Merger Agreement" means the Merger Agreement between Oldco and
the Company, dated as of June 16, 2000, in the form attached hereto as Exhibit D
that documents the First Merger.
"First Redemption Date" has the meaning assigned thereto in Section
11.02.
"Fixed Charge Coverage Ratio" means for any Computation Period, the
ratio of (a) the total for such period of EBITDA minus all Capital Expenditures
(other than Capital Expenditures, in an amount not to exceed $7,000,000,
actually expended on the Company's North 7th Street facility in San Jose,
California in fiscal year 2000) to (b) the sum for such period of (i) cash
Interest Expense plus (ii) all payments of principal of Indebtedness that are
scheduled to be paid during the 12 months immediately following the last day of
such Computation Period (provided that with respect to the Computation Periods
ended on the Fiscal Quarters ending on September 30, 2004, December 31, 2004 and
March 31, 2005, the amount of all payments of principal scheduled to be paid in
respect of the Senior Credit Agreement shall be deemed to be $15,000,000) plus
(iii) income taxes paid by the Company and its Subsidiaries.
"Fully Diluted" means, with respect to the Common Stock, as of a
particular time the total outstanding shares of Common Stock as of such time,
determined by treating all outstanding options, warrants and other rights for
the purchase or other acquisition of shares of Common Stock (whether or not then
vested or exercisable) as having been exercised and by treating all outstanding
securities directly or indirectly convertible into or exchangeable for shares of
Common Stock (whether or not then exercisable or convertible) as having been so
converted or exchanged.
"GAAP" means generally accepted United States accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination.
"GAAS" means generally accepted United States auditing standards set
forth in the Professional Standards prescribed by the American Institute of
Certified Public Accountants.
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"Governmental Approvals" means all authorizations, consents, approvals,
licenses, registrations and filings with, and reports to, all Governmental
Authorities.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantee Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any debt, obligation or
other liability of any other Person (other than by endorsements of instruments
in the course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of any Person's
obligation in respect of any Guarantee Liability will (subject to any limitation
set forth therein) be deemed to be the principal amount of the debt, obligation
or other liability supported thereby.
"Hazardous Substances" has the meaning assigned thereto in Section 6.15.
"Hedging Agreement" means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.
"Hedging Obligation" means, with respect to any Person, any liability of
such Person under any Hedging Agreement.
"Holder" means each Purchaser and any other holder of any Note or any
portion of the Warrant Securities or the Purchased Capital Stock.
"Indebtedness" means, with respect to any Person, without duplication:
(a) all obligations of such Person for borrowed money, whether or not evidenced
by bonds, debentures, notes or similar instruments, (b) all obligations of such
Person as lessee under Capital Leases which have been or should be recorded as
liabilities on a balance sheet of such Person in accordance with GAAP, (c) all
obligations of such Person to pay the deferred purchase price of property or
services (excluding trade accounts payable in the ordinary course of business),
(d) all obligations secured by a Lien on the property of such Person, whether or
not such obligations shall have been assumed by such Person, (e) all
obligations, contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn) and banker's acceptances issued for the
account of such Person (including the Letters of Credit (as defined in the
Senior Credit Agreement)), (f) all Hedging Obligations of such Person, (g) all
Guarantee Liabilities of such Person and (h) all Indebtedness of any partnership
of which such Person is a general partner; provided that "Indebtedness" does not
include the Company's obligations to make the "Services Payments Earnout" to
Eggers Family Partners, LP under the Construction,
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Project Consulting, Technical and Financial Services Agreement dated as of June
1, 1998 between Cupertino and Eggers Family Partners, LP.
"Indemnified Party" has the meaning assigned thereto in Section 14.01.
"Initial Public Offering" means the initial Public Offering of Common
Stock.
"Interest Expense" means, for any period, (i) the consolidated interest
expense of the Company and its Subsidiaries for such period (including all
imputed interest on Capital Leases) minus (ii) consolidated interest income of
the Company and its Subsidiaries for such period; provided that (x) for the
Computation Period ending on the last day of the second fiscal quarter in 2000,
Interest Expense will be calculated on the basis of interest expense for the
three-month period ending on such day multiplied by 4, (y) for the Computation
Period ending on the last day of the third fiscal quarter in 2000, Interest
Expense will be calculated on the basis of interest expense for the six-month
period ending on such day multiplied by 2 and (z) for the Computation Period
ending on the last day of the fourth fiscal quarter in 2000, Interest Expense
will be calculated on the basis of interest expense for the nine-month period
ending on such day multiplied by 4/3.
"Investment" means , relative to any Person, any investment in another
Person, whether by acquisition of any debt or equity security, by making any
loan or advance or by becoming obligated with respect to a Guarantee Liability
in respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business).
"Investor Rights Agreement" means the Investor Rights Agreement dated as
of the date hereof, by and among the Company and the Purchasers, substantially
in the form attached hereto as Exhibit C, as amended, supplemented or otherwise
modified from time to time.
"Judgments" has the meaning assigned thereto in Section 13.01(i).
"Junior Indebtedness" has the meaning assigned thereto in Section 12.02.
"Liabilities" has the meaning assigned thereto in Section 6.07.
"Lien" means, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person which secures payment or performance of any
obligation and will include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.
"Losses" has the meaning assigned thereto in Section 14.01.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the condition (financial or otherwise),
operations, assets, business, properties or prospects of the Company, Oldco and
their Subsidiaries taken as a whole, (b) a material impairment of the ability of
the Company, Oldco or any Subsidiary of either to perform any of its obligations
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under any Transaction Document or Mergers and Redemptions Document, or (c) a
material adverse effect or upon the legality, validity, binding effect or
enforceability against the Company, Oldco or any Subsidiary of either of any
Transaction Document or Mergers and Redemptions Document.
"Mergers" has the meaning assigned thereto in the Statement of Purpose
of this Agreement.
"Mergers and Redemptions" has the meaning assigned thereto in the
Statement of Purpose of this Agreement.
"Mergers and Redemptions Documents" means all agreements and documents
executed or delivered in connection with the Mergers and Redemptions, including,
without limitation, the First Merger Agreement, the Second Merger Agreement, the
Pre-Merger Redemptions Agreements and the Post-Merger Redemptions Agreements.
"Multiemployer Pension Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company, Oldco or any member of the
Controlled Group may have any liability.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Company or any ERISA Affiliate is making, or is
accruing an obligation to make, or has made or accrued an obligation to make,
contributions within the preceding six years.
"Net Cash Proceeds" means, with respect to any Public Offering, the
aggregate cash proceeds received by the Company or any Subsidiary thereof
pursuant to such Public Offering, net of the direct costs relating to such
issuance (including sales and underwriter's commissions and legal, accounting
and investment banking fees).
"Net Worth" means the Company's consolidated stockholders' equity.
"Note" means any Senior Subordinated Note issued pursuant to this
Agreement, as amended or supplemented from time to time, and "Notes" means each
such Note, collectively.
"Note Purchaser" has the meaning assigned thereto in the initial
paragraph of this Agreement.
"Note Register" has the meaning assigned thereto in Section 15.04(b).
"Note Payoff and QPO Date" has the meaning assigned thereto in Section
8.01.
"Oldco" has the meaning assigned thereto in the Statement of Purpose of
this Agreement.
"Participant" has the meaning assigned thereto in Section 15.04(c).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
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"Pension Plan" means a "pension plan," as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
Multiemployer Pension Plan), and to which the Company, Oldco or any member of
the Controlled Group may have any liability, including any liability by reason
of having been a substantial employer within the meaning of Section 4063 of
ERISA at any time during the preceding five years, or by reason of being deemed
to be a contributing sponsor under Section 4069 of ERISA.
"Permitted Acquisitions" has the meaning assigned thereto in Section
10.01(c).
"Permitted Disposition" has the meaning assigned thereto in Section
10.06.
"Permitted Hedging Obligations" means all obligations (contingent or
otherwise) of the Company or any Subsidiary thereof existing or arising under
Hedging Agreements, provided that each of the following criteria is satisfied:
(a) such obligations are (or were) entered into by such Person in the ordinary
course of business or pursuant to the Senior Credit Documents for the purpose of
directly mitigating risks associated with liabilities, commitments or assets
held or reasonably anticipated by such Person, or changes in the value of
securities issued by such Person in conjunction with a securities repurchase
program not otherwise prohibited hereunder, and not for purposes of speculation
or taking a "market view," and (b) such Hedging Agreements do not contain (i)
any provision ("walk-away" provision) exonerating the non-defaulting party from
its obligation to make payments on outstanding transactions to the defaulting
party or (ii) any provisions creating or permitting the declaration of an event
of default, termination event or similar event upon the occurrence of an Event
of Default hereunder (other than an Event of Default under Section 12.1.1 of the
Senior Credit Agreement).
"Permitted Investments" has the meaning assigned thereto in Section
10.07.
"Permitted Liens" has the meaning assigned thereto in Section 10.08.
"Permitted Redemptions" has the meaning assigned thereto in the
Statement of Purpose of this Agreement.
"Person" means any individual, firm, corporation, partnership, trust,
limited liability company, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other entity of any
kind, and shall include any successor (by merger or otherwise) of such entity.
"Post-Merger Redemptions" has the meaning assigned thereto in the
Statement of Purpose of this Agreement.
"Post-Merger Redemptions Agreements" means the Repurchase Agreements,
dated as of the date hereof, between the Company and each of Eugene Ravizza,
Claranne Ravizza Long, the Claranne Ravizza Long Trust, the Ravizza Children's
Trust II and the Ravizza Children's Trust III in the form attached hereto as
Exhibit E that document the Post-Merger Redemptions.
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"Pre-Merger Redemptions" has the meaning assigned thereto in the
Statement of Purpose of this Agreement.
"Pre-Merger Redemptions Agreements" means the Redemption and Purchase
Agreements, dated the date hereof, between Cupertino and Walter E. Ryley,
between Cascade and each of Dennis Antweiler and Robert Sinek and between
Electronics and each of Aaron Colton and David Duppong, in the form attached
hereto as Exhibit F that document the Pre-Merger Redemptions.
"Premium" has the meaning assigned thereto in Section 11.01.
"Public Offering" means any underwritten primary public offering of any
class or series of Capital Stock of the Company or any of its Subsidiaries
pursuant to a registration statement declared effective under the Securities
Act.
"Purchased Capital Stock" means the shares of Capital Stock bought by
the Purchasers pursuant to this Agreement on the Closing Date and any other
shares of the Company's Capital Stock issued with respect to such shares
(including pursuant to the Investor Rights Agreement (including Sections 3 and 7
thereof)).
"Purchasers" has the meaning assigned thereto in the initial paragraph
of this Agreement.
"Qualified Public Offering" means a Public Offering resulting in Net
Cash Proceeds in an amount equal to or greater than $50,000,000.
"Ravizza Family" means Eugene A. Ravizza, such person's past and current
spouses and his lineal descendants, trusts for the benefit of any of the
foregoing, and charitable trusts or organizations who received their interest in
the Company as a gift from or in connection with the death of any person who is
deemed to be a member of the Ravizza Family under this definition..
"RCRA" has the meaning assigned thereto in Section 6.15.
"Redemption Notice" has the meaning assigned thereto in Section
11.03(b).
"Regulatory Constraint" has the meaning assigned thereto in Section
9.02(c).
"Regulatory Requirement" has the meaning assigned thereto in Section
9.02(c).
"Related Person" means with respect to a specified individual, such
individual's Family, such individual's Affiliates and all Affiliates of such
individual's Family, and with respect to a specified Person other than an
individual, any Affiliate of the specified Person and the Family of such
Affiliates that are individuals.
"Release" has the meaning specified in CERCLA and the term "Disposal"
(or "Disposed") has the meaning specified in RCRA; provided that in the event
either CERCLA or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning will apply as of the effective date of
such amendment; and provided, further, that to the extent that the
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laws of a state wherein any affected property lies establish a meaning for
"Release" or "Disposal" which is broader than is specified in either CERCLA or
RCRA, such broader meaning will apply.
"Required Equity Holders" means Holders holding at least a majority of
the Warrant Securities and Purchased Capital Stock then outstanding, assuming
for the purpose of this definition that all Warrants have been exercised.
"Required Holders" means the Required Noteholders and the Required
Equity Holders.
"Required Noteholders" means Holders holding at least a majority of the
aggregate principal balance of Notes then outstanding.
"Requirements of Law" means, with respect to a Person, the certificate
of incorporation and bylaws or other organizational or governing documents of
such Person, and any law, treaty, rule, regulation, right, privilege,
qualification, license or franchise or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject or pertaining to any or all of the transactions contemplated or referred
to herein.
"Ryley Family" means James S. Ryley and W. Eugene Ryley, the current and
past spouses of such persons and the lineal descendants of such persons, trusts
for the benefit of any of the foregoing and charitable trusts or organizations
who received their interest in the Company as a gift from or in connection with
the death of any person who is deemed to be a member of the Ryley Family under
this definition.
"Second Merger" has the meaning assigned thereto in the Statement of
Purpose of this Agreement.
"Second Merger Agreement" means the Merger Agreement among the Company,
Cupertino, Cascade and Electronics dated as of the Closing Date in the form
attached hereto as Exhibit G that documents the Second Merger.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Selling Shareholders" has the meaning assigned thereto in the initial
paragraph of this Agreement.
"Senior Credit Agreement" means the Credit Agreement dated as of June
21, 2000 among the Company, the financial institutions party thereto and Bank of
America, N.A., individually and as agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with Section
10.11, together with any replacement or refinancing thereof in accordance with
Section 10.11.
"Senior Credit Documents" means the Senior Credit Agreement and all
other agreements and documents executed or delivered in connection therewith, as
the same may be amended,
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supplemented or otherwise modified from time to time in accordance with Section
10.11, together with any replacement or refinancing thereof in accordance with
Section 10.11.
"Stockholders Agreement" means the Stockholders Agreement dated as of
the date hereof, by and among the Company, the Purchasers and all other
shareholders, substantially in the form attached hereto as Exhibit H, as
amended, supplemented or otherwise modified from time to time.
"Subsidiary" means, as to any Person, any other Person in which such
Person owns, directly or indirectly, a majority of the Capital Stock of such
other Person or has the power, directly or indirectly, to elect a majority of
the members of the board of directors (or its equivalent) of such other Person.
"TA" has the meaning assigned thereto in the initial paragraph of this
Agreement.
"Total Indebtedness" means all Indebtedness of the Company and its
Subsidiaries, determined on a consolidated basis, excluding (i) contingent
obligations in respect of Guarantees (except to the extent constituting
Guarantees in respect of Indebtedness of a Person other than the Company or any
of its Subsidiary), (ii) Hedging Obligations and (iii) Indebtedness of the
Company to its Subsidiaries and Indebtedness of the Company's Subsidiaries to
the Company or to other Subsidiaries of the Company.
"Total Indebtedness to EBITDA Ratio" means, as of the last day of any
fiscal quarter, the ratio of (i) Total Indebtedness as of such day to (ii)
EBITDA for the Computation Period ending on such day.
"Transaction Documents" means, collectively, this Agreement, the Notes,
the Warrants, the Shareholders Agreement and the Investor Rights Agreement.
"Warrant Securities" means, collectively, the Warrants and any shares of
Capital Stock of the Company issued upon exercise of the Warrants, and any other
shares of the Company's Capital Stock issued with respect to such shares or
otherwise pursuant thereto.
"Warrants" means the warrants issued by the Company to the Purchaser on
the closing Date pursuant to this Agreement, and any other warrants issued in
replacement or substitution thereof.
"Wholly-Owned Subsidiary" means, as to any Person, (a) any corporation
100% of whose Capital Stock (other than director's qualifying shares) is at the
time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such
Person and (b) any partnership, limited liability company, association, joint
venture or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
1.02 Accounting Terms; Financial Statements. All accounting terms used
herein not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with sound accounting practice. The term
"sound accounting practice" means such accounting practice as, in the opinion of
the independent certified public accountants regularly retained by the Company,
conforms at the time to GAAP applied on a consistent basis except for
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changes with which such accountants concur. If any changes in accounting
principles are hereafter occasioned by promulgation of rules, regulations,
pronouncements or opinions of or are otherwise required by, the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions), and any
of such changes results in a change in the method of calculation of, or affects
the results of such calculation of, any of the financial covenants, standards or
terms found herein, then the parties hereto agree to enter into and diligently
pursue negotiations in order to amend such financial covenants, standards or
terms so as to reflect fairly and equitably such changes, with the desired
result that the criteria for evaluating the financial condition and results of
operations of the Company shall be the same after such changes as if such
changes had not been made; provided, that prior to any such amendments,
compliance with the financial covenants contained herein shall continue to be
determined in accordance with GAAP as in effect prior to such change.
ARTICLE II
PURCHASE AND SALE OF NOTES AND WARRANTS
2.01 Purchase and Sale of Notes, Warrants and Common Stock. Subject to
the terms and conditions hereof, on the Closing Date (i) the Company will issue
to each Purchaser purchasing Notes, and each such Purchaser will severally, not
jointly, acquire from the Company, Notes in the aggregate principal amounts set
forth opposite their names in Schedule 2.01 under the heading "Aggregate
Principal Amount of Notes", (ii) the Company shall issue to each Purchaser
purchasing Warrants, and each such Purchaser shall acquire from the Company,
Warrants exercisable for the number of shares of Fully Diluted Common Stock set
forth opposite their names in Schedule 2.01 under the heading "Warrants,", (iii)
the Selling Shareholders will sell to each Purchaser purchasing Purchased
Capital Stock from the Selling Shareholders, and each such Purchaser will
severally, not jointly, acquire from the Selling Shareholders, the number of
shares of Common Stock set forth opposite each Selling Shareholder's and
Purchaser's name on Schedule 2.01 under the heading "Purchased Capital Stock,"
and (iv) the Company will issue to each Purchaser purchasing Purchased Capital
Stock from the Company, and each such Purchaser will severally, not jointly,
acquire from the Company, the number of shares of Common Stock set forth
opposite the Company's and each Purchaser's name on Schedule 2.01 under the
heading "Purchased Capital Stock". The Notes shall be substantially in the form
of Exhibit A attached hereto, and the Warrants shall be substantially in the
form of Exhibit B attached hereto, in each case, as appropriately completed in
conformity herewith.
2.02 Purchase Price. The aggregate purchase price of the Notes and the
Warrants shall be Thirty-Five Million Dollars ($35,000,000.00) which shall be
payable by the appropriate Purchasers on the Closing Date as attached in
Schedule 2.01. The aggregate purchase price of the Purchased Capital Stock shall
be Forty Million Seven Hundred Twenty-One and 94/100 Dollars ($40,000,721.94)
which shall be payable by the appropriate Purchasers on the Closing Date to the
Selling Shareholders in the amounts set forth in Schedule 2.01.
2.03 Original Issue Discount. The Company and the Purchasers acknowledge
that under the regulations of the United States Department of Treasury, the
issuance of the Notes and
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the Warrants for an aggregate, combined purchase price will result in the
creation of "original issue discount" on the Notes equal to the value of the
Warrants. After taking into account all relevant factors (including the fact
that no public market for the Common Stock currently exists, the general
condition of the financial markets at this time, the exercise price for shares
of Common Stock issuable upon exercise of the Warrants, the nature of the rights
provided for in the Warrants and all other matters concerning the transactions
contemplated by this Agreement), the Company and the Purchasers agree that the
aggregate original issue discount on the Notes (i.e., the aggregate value of the
Warrants) is $2,610,590. Neither the Company nor the Purchasers will take any
position for United States federal income tax purposes that is inconsistent with
the provisions of this Section 2.03.
2.04 Closing. Subject to the terms and conditions of this Agreement, the
issuance and purchase of the Notes, the Warrants and the Purchased Capital Stock
shall take place at the closing (the "Closing") to be held on June 21, 2000 or
at such other time as the Company and the Purchasers may agree in writing (the
"Closing Date"), at such location as the Company and the Purchasers may agree;
provided, that in any event the Closing Date shall be on or before August 1,
2000. At the Closing, the Company shall execute and deliver to each Purchaser
purchasing Notes and Warrants the Notes in the principal amounts and the
Warrants exercisable for the number of shares set forth opposite such
Purchaser's name on Schedule 2.01 against delivery to the Company by each
Purchaser of the purchase price therefor, in the amount set forth by wire
transfer of immediately available funds or by delivery of cashier's or certified
check. At the Closing, each of the Selling Shareholders shall deliver to each
Purchaser purchasing Purchased Capital Stock from the Selling Shareholders the
number of shares of Common Stock set forth next to such Selling Shareholder's
and such Purchaser's name on Schedule 2.01, together with appropriately executed
stock powers for transfer to each Purchaser, against delivery to such Selling
Shareholder of the purchase price thereof, in the amount set forth next to such
Selling Shareholder's and such Purchaser's name in Schedule 2.01 under the
heading "Price for Purchased Capital Stock." At the Closing, the Company shall
deliver to each Purchaser purchasing Purchased Capital Stock from the Company
the number of shares of Common Stock set forth next to the Company's and such
Purchaser's name on Schedule 2.01 against delivery to the Company of the
purchase price therefor, in the amount set forth next to the Company's and such
Purchaser's name in Schedule 2.01. The Company, the Purchasers and the Selling
Shareholder hereby agree that the Closing shall not occur with respect to any of
such parties, and therefore no such party shall have any obligations hereunder,
unless and until each of such parties performs its obligations in this Article
II.
ARTICLE III
CONDITIONS TO THE OBLIGATION
OF THE PURCHASERS TO CLOSE
The obligation of the Purchasers to purchase the Notes, Warrants and the
Purchased Capital Stock, to pay the purchase price therefor at the Closing and
to perform any obligations hereunder, shall be subject to the satisfaction as
reasonably determined by the Purchasers of the following conditions on or before
the Closing Date:
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3.01 Representations and Warranties. The representations and warranties
contained in Article V and Article VI hereof shall be true and correct in all
respects on and as of the Closing Date as if made on and as of such date.
3.02 Compliance with this Agreement. The Company shall have performed
and complied with all of the agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Company on or
before the Closing Date.
3.03 Officer's Certificate. Each Purchaser shall have received a
certificate dated as of the Closing Date from the chief executive officer and
chief financial officer of the Company, in form and substance satisfactory to
such Purchaser, to the effect that (a) all representations and warranties of the
Company contained in this Agreement are true, correct and complete in all
respects, (b) the Company is not in violation of any of the covenants contained
in this Agreement and (c) all conditions precedent to the Closing of this
Agreement to be performed by the Company have been duly performed.
3.04 Secretary's Certificates. Each Purchaser shall have received a
certificate from the Company, Oldco and each of their Subsidiaries dated as of
the Closing Date, immediately before the First Merger or immediately before the
Second Merger, as applicable, and signed by the Secretary or an Assistant
Secretary of the Company, Oldco and each of their Subsidiaries certifying (a)
that the attached copies of the Company Charter Documents (including the
Certificate of Incorporation certified by the Delaware Secretary of State), and
the articles of incorporation (certified by the California Secretary of State)
and bylaws of Oldco, Cupertino, Cascade and Electronics, the resolutions of the
Boards of Directors of the Company, Oldco and each of their Subsidiaries
approving, as applicable, this Agreement, the Transaction Documents, the Senior
Credit Documents, the Mergers and Redemptions Documents and the transactions
contemplated hereby and thereby, are all true, complete and correct and remain
unamended and in full force and effect, (b) as to the incumbency and specimen
signature of each officer of the Company, Oldco and each of their Subsidiaries
executing any Transaction Document, any Senior Credit Document or any Mergers
and Redemptions Document and any other document delivered in connection herewith
or therewith on behalf of the Company or any of its Subsidiaries and (c) that
attached are certificates of a recent date attesting to the good standing of the
Company, Oldco and each of their Subsidiaries in the jurisdiction of such
Person's incorporation and, except with respect to the Company, in each other
state in which such Person is transacting business and each such Person remains
in good standing in the jurisdiction of its incorporation and, except with
respect to the Company, each other state in which such Person is transacting
business.
3.05 Transaction Documents; Mergers and Redemptions Documents; Senior
Credit Documents. Each Purchaser shall have received true, complete and correct
copies of the Transaction Documents, the Mergers and Redemptions Documents, the
Senior Credit Documents and such other documents as it may reasonably request in
connection therewith, all in form and substance satisfactory to such Purchaser.
3.06 Financial Matters.
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(a) Financial Statements. Each Purchaser shall have received copies
of the financial statements referred to in Section 6.05.
(b) Pro Forma and Projected Financial Statements. Each Purchaser
shall have received (i) an estimated pro forma unaudited balance sheet of the
Company and each of its Subsidiaries as of the Closing Date adjusted to give
effect to the issuance of the Notes and the Warrants, the sale of the Purchased
Capital Stock, the Mergers and Redemptions and the other transactions
contemplated to occur on the Closing Date pursuant to the Transaction Documents,
the Mergers and Redemptions Documents, the Senior Credit Documents and the
application of the proceeds of the Notes and (ii) pro forma projected
consolidated financial statements (including balance sheets and statements of
operations and cash flow) reflecting the forecasted consolidated financial
condition and results of operations of the Company and each of its Subsidiaries
for the six month period commencing July 1, 2000 and on an annual basis for the
period commencing January 1, 2001 and ending on December 31, 2002, prepared by
the Company and adjusted to give effect to the issuance of the Notes and the
Warrants, the sale of the Purchased Capital Stock, the Mergers and Redemptions
and the other transactions contemplated to occur on the Closing Date pursuant to
the Transaction Documents, the Mergers and Redemptions Documents, the Senior
Credit Documents and the application of the proceeds of the Notes, which pro
forma unaudited balance sheet and pro forma projected consolidated financial
statements shall be in form and substance satisfactory to such Purchaser.
(c) Payment at Closing. There shall have been paid by the Company to
each Purchaser any accrued and unpaid fees due such Purchaser (including,
without limitation, all reasonable legal fees and expenses required to be paid
pursuant to Section 15.16 (but subject to any limitation set forth therein), and
the funding fees payable pursuant to Section 15.17), and to any other Person
such amount as may be due, including all taxes, fees and other charges then due
in connection with the execution, delivery, recording, filing and registration
of any of the Transaction Documents, Mergers and Redemptions Documents or Senior
Credit Documents.
3.07 Contracts. Each Purchaser shall have received copies of all
contracts and agreements listed in Schedules 6.32(a), 6.32(b), 6.34(a) and
6.34(b) to which the Company will be a party immediately after the Closing Date,
each as originally executed and delivered by the parties thereto and as in
effect on the Closing Date.
3.08 Purchase Permitted by Applicable Laws. The acquisition of and
payment for the Notes, the Warrants and the Purchased Capital Stock, as the case
may be, to be acquired by each Purchaser hereunder and the consummation of the
transactions contemplated hereby and the Mergers and Redemptions (a) shall not
be prohibited by any Requirement of Law and (b) shall not subject such Purchaser
to any penalty or, in its reasonable judgment, other onerous condition under or
pursuant to any Requirement of Law.
3.09 Consents and Approvals. All consents, exemptions, authorizations
or other actions by, or notices to, or filings with, Governmental Authorities
and other Persons in respect of all Requirements of Law and, except as disclosed
on Schedule 3.09, with respect to Contractual Obligations required to be
disclosed on Schedule 6.32(a), 6.32(b), 6.34(a) or 6.34(b)
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of the Company, Oldco and each of their Subsidiaries required in connection
either with the execution, delivery or performance by the Company, Oldco and
each of their Subsidiaries of or the performance by the Company, Oldco and each
of their Subsidiaries of their obligations under this Agreement, the other
Transaction Documents, the Senior Credit Documents and the Merger and
Redemptions Documents or with the business and operations of the Company, Oldco
and their Subsidiaries shall have been obtained and be in full force and effect,
and each Purchaser shall have been furnished with appropriate evidence thereof,
and all waiting periods shall have lapsed without extension or the imposition of
any conditions or restrictions.
3.10 Investor Rights Agreement. The Investor Rights Agreement shall
have been duly executed and delivered by each of the parties thereto.
3.11 The Mergers and Redemptions. The Mergers and Redemptions (other
than the Post-Merger Redemptions) shall have occurred and each Purchaser shall
have been furnished satisfactory evidence thereof. All actions necessary to
complete the Post-Merger Redemptions immediately after the Closing pursuant to
the terms and conditions of the Post-Merger Redemptions Documents shall have
been taken, without the waiver of any conditions precedent thereto required to
be performed on or prior to the consummation of the transactions contemplated
thereby, or any waiver of any terms thereof.
3.12 [INTENTIONALLY RESERVED]
3.13 Opinion of Counsel. The Purchaser shall have received an opinion
of Farella Braun & Martel LLP, counsel to the Company and the Selling
Shareholders, dated the Closing Date and in substantially the form attached
hereto as Exhibit I hereto.
3.14 Disbursement Instructions. The Purchasers shall have received
written instructions from the Company and the Selling Shareholders directing the
payment of the purchase price of the Notes, the Warrants and the Purchased
Capital Stock.
3.15 Other Documents. The Company shall have delivered to each
Purchaser such other documents, certificates and opinions as such Purchaser or
its counsel may reasonably request.
3.16 Senior Credit Facility. The transactions contemplated by the
Senior Credit Documents (other than the initial extension of credit thereunder)
shall have been consummated pursuant to the terms and conditions of the Senior
Credit Documents, without the waiver of any conditions precedent thereto
required to be performed on or prior to the consummation of the transactions
contemplated thereby, or any waiver of any terms thereof and immediately after
each Purchaser's purchase of the Notes, the Lenders (as defined in the Senior
Credit Agreement) shall be obligated to provide cash proceeds to the Company
from term loans of not less than $65,000,000 and to provide a committed
revolving credit facility to the Company of not less than $75,000,000 all of
which shall be available on the Closing Date on the terms and conditions of the
Senior Credit Documents, after giving effect to the transactions under the
Transaction Documents and the Mergers and Redemptions Documents contemplated to
occur on the Closing Date.
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3.17 [INTENTIONALLY RESERVED]
3.18 No Proceedings. There shall be no legal actions, suits,
proceedings, claims or disputes pending or threatened, at law, in equity, in
arbitration or before any Governmental Authority against or affecting any
Purchaser, the Company, Oldco or any of their Subsidiaries or any Selling
Shareholder (a) which affects the legality, validity or enforceability of this
Agreement, any other Transaction Document, any Senior Credit Document or any
Mergers and Redemptions Document or which seeks to obtain damages or obtain
relief as a result of, the transactions contemplated by this Agreement, any
other Transaction Document, any Senior Credit Document or any Mergers and
Redemptions Document or (b) which could reasonably be expected to have a
Material Adverse Effect. There shall not have been any injunction, writ,
temporary restraining order, decree or any order of any nature issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement, any of the other
Transaction Documents, any Senior Credit Document or any Mergers and Redemptions
Document.
3.19 SBA Documents and Information. The Company shall have executed
and delivered to BancAmerica forms and information required by the rules and
regulations of the United States Small Business Administration, including,
without limitation, a Size Status Declaration on SBA Form 480 and an Assurance
of Compliance on SBA Form 652 and information necessary for the preparation of a
Portfolio Financing Report on SBA Form 1031 and a letter agreement with respect
to compliance by the Company and its Subsidiaries with the rules and regulations
of the United States Small Business Administration.
3.20 Stockholders Agreement. The Stockholders Agreement shall have
been duly executed and delivered by the Company and each of the stockholders of
the Company immediately prior to the Closing.
3.21 Director Indemnification Agreements. A Director's Indemnification
Agreement, substantially in the form of Exhibit J, shall have been signed by the
Company and each director of the Company and Ann B. Hayes and Roger Kafker (who
both will become directors three days after the Closing Date).
3.22 Insurance. Each Purchaser shall have received certificates of
insurance evidencing the existence of all insurance required to be maintained by
the Company and its Subsidiaries pursuant to Section 9.01(c) hereof.
3.23 Non-Solicitation and Confidentiality Agreements. A Non-Solicitation
and Confidentiality Agreement, substantially in the form of Exhibit K, shall be
signed by the Company and each of Eugene A. Ravizza, James S. Ryley, Claranne
Ravizza Long and Walter E. Ryley.
3.24 Shareholder Agreements Terminations. The Purchasers shall have
received satisfactory evidence of the termination prior to the Mergers and
Redemptions of:
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(a) the Stock Purchase Agreement, dated December 27, 1994, among Oldco,
Eugene A. Ravizza, James S. Ryley, Claranne Ravizza Long, Richard L. Collins,
The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The Ravizza
Childrens's Trust III and Walter E. Ryley;
(b) the Stock Purchase Agreement, dated January 1, 1985, between
Cupertino and W. Eugene Ryley;
(c) the Stock Purchase Agreement, dated January 1, 1985, between
Cupertino and Claranne Ravizza Long;
(d) the Stock Purchase Agreement, dated July 11, 1988, between Cascade
Controls, Inc. and Dennis Antweiler;
(e) the Stock Purchase Agreement, dated December 29, 1989, between
Cascade Controls, Inc. and Robert L. Sinek;
(f) the Stock Purchase Agreement, dated February 19, 1992, between
Cupertino Electronics, Inc. and Aaron F. Colton;
(g) the Stock Purchase Agreement, dated June 5, 1989, between Cupertino
Electronics, Inc. and Aaron F. Colton; and
(h) the Stock Purchase Agreement, dated December 28, 1997, between
Cupertino Electronics, Inc. and David Duppong.
ARTICLE IV
CONDITIONS TO THE OBLIGATION
OF THE COMPANY AND THE SELLING SHAREHOLDERS TO CLOSE
The obligations of the Company to issue and sell the Notes and to issue
the Warrants to a Purchaser and the obligations of the Selling Shareholders to
sell the Purchased Capital Stock to a Purchaser, and the obligations of the
Company and the Selling Shareholders to perform their other respective
obligations hereunder with respect to such Purchaser, shall be subject to the
satisfaction as determined by the Company and the Selling Shareholders of the
following conditions on or before the Closing Date:
4.01 Representations and Warranties. The representations and
warranties of such Purchaser contained in Article VII hereof shall be true and
correct in all respects on and as of the Closing Date as of made on and as of
such date.
4.02 Compliance with this Agreement. Such Purchaser shall have
performed and complied in all respects with all of its agreements and conditions
set forth or contemplated herein that are required to be performed or complied
with by the Purchaser on or before the Closing Date.
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4.03 Issuance Permitted by Requirements of Laws. The issuance of the
Notes and the Warrants by the Company, the sale of the Purchased Capital Stock
by the Selling Shareholders and the consummation of the transactions
contemplated hereby (a) shall not be prohibited by any Requirement of Law and
(b) shall not subject the Company or such Purchaser to any penalty or, in its
reasonable judgment, other onerous condition under or pursuant to any
Requirement of Law.
4.04 Consents and Approvals. All consents, exemptions, authorizations
or other actions by, or notices to, or filings with, Governmental Authorities
and other Persons in respect of all Requirements of Law and Contractual
Obligations of such Purchaser required in connection with the execution,
delivery or performance by such Purchaser or enforcement against such Purchaser
of this Agreement shall have been obtained and be in full force and effect, and
the Company shall have been furnished with appropriate evidence thereof, and all
waiting periods shall have lapsed without extension or the imposition of any
conditions or restrictions.
4.05 Senior Credit Facility. The transactions contemplated by the Senior
Credit Documents (other than the initial extension of credit thereunder) shall
have been consummated pursuant to the terms and conditions of the Senior Credit
Documents, without the waiver of any conditions precedent thereto require to be
performed on or prior to the consummation of the transactions contemplated
thereby, or any waiver of any terms thereof and immediately after the
Purchasers' purchase of the Notes, the Lenders (as defined in the Senior Credit
Agreement) shall be obligated to provide cash proceeds to the Company from term
loans of not less than $65,000,000 and to provide a committed revolving credit
facility to the Company of not less than $75,000,000 all of which shall be
available on the Closing Date on the terms and conditions of the Senior Credit
Documents, after giving effect to the transactions under the Transaction
Documents and the Mergers and Redemptions Documents contemplated to occur on the
Closing Date.
4.06 No Proceedings. There shall be no legal actions, suits,
proceedings, claims or disputes pending or threatened, at law, in equity, in
arbitration or before any Governmental Authority against such Purchaser, the
Company, Oldco or any of their Subsidiaries or any Selling Shareholder (a) which
affects the legality, validity or enforceability of this Agreement, any other
Transaction Document, any Senior Credit Document or any Mergers and Redemptions
Document or which seeks to obtain damages or obtain relief as a result of, the
transactions contemplated by this Agreement, any other Transaction Document, any
Senior Credit Document or any Mergers and Redemptions Document or (b) which
could reasonably be expected to have a Material Adverse Effect. There shall not
have been any injunction, writ, temporary restraining order, decree or any order
of any nature issued by any court or other Governmental Authority purporting to
enjoin or restrain the execution, delivery or performance of this Agreement, any
of the other Transaction Documents, any Senior Credit Document or any Mergers
and Redemptions Document.
4.07 Stockholders Agreement. The Stockholders Agreement shall have
been duly executed and delivered by each of the Purchasers.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
REGARDING THE SELLING SHAREHOLDERS
Each Selling Shareholder hereby severally represents and warrants to
each Purchaser of the Purchased Capital Stock as follows:
5.01 Authority. Such Selling Shareholder has full power, authority and
legal capacity to execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of such Selling Shareholder, enforceable against him in accordance
with the terms of this Agreement.
5.02 No Conflict. Neither the execution and delivery of this Agreement
nor the consummation or performance of any of the transactions contemplated
hereby will, with or without notice or lapse of time, (a) if such Selling
Shareholder is a trust, violate or conflict with such Selling Shareholder's
trust agreement or other constituent documents, (b) violate any Requirement of
Law to which such Selling Shareholder or any of his Purchased Capital Stock is
subject, (c) violate, conflict with, result in a breach of, constitute a default
under, result in the acceleration of or give any Person the right to accelerate
the maturity or performance of, or to cancel, terminate, modify, or exercise any
remedy under, any Contractual Obligation of such Selling Shareholder or (d)
result in the imposition of any Lien on any of such Selling Shareholder's
Purchased Capital Stock. Such Selling Shareholder need not obtain any consent,
exemption, authorization or other action by, or make any notice to or filing
with any Person in order to consummate or perform the transactions contemplated
by this Agreement.
5.03 No Brokers' Fees. Such Selling Shareholder has no obligation to
pay, or Liability for, any fee or commission to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which any
Purchaser or the Company or any of its Subsidiaries could become obligated or
liable.
5.04 Shares. Such Selling Shareholder holds of record and owns
beneficially the number of shares of Common Stock set forth next to his name in
Schedule 5.04, free and clear of any Lien or restriction on transfer (other than
any restriction under the Securities Act or any state securities law) and such
Common Stock is the only Capital Stock of the Company or any of its Subsidiaries
held of record or beneficially owned by him. Such Selling Shareholder is not a
party to any option, warrant, purchase right, right of first refusal or other
Contractual Obligation (other than this Agreement) that could require him to
sell, transfer or otherwise dispose of any Capital Stock of the Company or any
of its Subsidiaries. Such Selling Shareholder is not a party to any voting
trust, proxy or other Contractual Obligation relating to the voting of any
Capital Stock of the Company or any of its Subsidiaries. On the Closing Date,
after the consummation of the transactions contemplated by this Agreement, each
Purchaser will have good and valid title to such Selling Shareholder's Purchased
Capital Stock listed next to such Purchaser's name on Schedule 2.01(a), free and
clear of any Lien or restriction on transfer (other than the Securities Act or
any state securities law).
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5.05 Absence of Proceedings. There is not any legal action, suit,
proceeding, claim or dispute pending or, to the knowledge of such Selling
Shareholder, threatened that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with the
transactions contemplated by this Agreement and the other Transaction Documents.
ARTICLE VI
REPRESENTATIONS AND
WARRANTIES REGARDING THE COMPANY
The Company hereby represents and warrants to each Purchaser as follows:
6.01 Corporate Existence and Power Organization. Immediately before the
First Merger, the Company, Oldco and each of their Subsidiaries was, immediately
before the Second Merger, the Company and each of its Subsidiaries was, and the
Company is, and immediately after the Post-Merger Redemptions will be, a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation; and immediately before the First Merger, the
Company, Oldco and each of their Subsidiaries was, immediately before the Second
Merger, the Company and each of its Subsidiaries was, and each of the Company
and each Subsidiary thereof is, and immediately after the Post-Merger
Redemptions will be, duly qualified to do business in each jurisdiction where,
because of the nature of its activities or properties, such qualification is
required, except for such jurisdictions where the failure to so qualify would
not have a Material Adverse Effect.
6.02 Authorization; No Conflict. (a) Immediately before the First
Merger, the Company, Oldco and each of their Subsidiaries was, immediately
before the Second Merger, the Company and each of its Subsidiaries was, and the
Company is and immediately after the Post-Merger Redemptions will be duly
authorized to execute and deliver each Transaction Document, Senior Credit
Document and Mergers and Redemptions Document to which it is a party, the
Company is duly authorized to issue the Notes and the Warrants and each of the
Company, Oldco and each of their Subsidiaries is duly authorized to perform its
obligations under each Transaction Document, Senior Credit Document and Mergers
and Redemptions Document to which it is a party. The execution, delivery and
performance by the Company of this Agreement and by each of the Company, Oldco
and each of their Subsidiaries of each Transaction Document, Senior Credit
Document and Mergers and Redemptions Documents to which it is a party, and the
consummation of the transactions hereunder and thereunder, did not, do not and
will not (a) require any consent or approval of any governmental agency or
authority (other than any consent or approval which has been obtained and is in
full force and effect), (b) conflict with (i) any provision of law, (ii) the
charter, by-laws or other organizational documents of the Company, Oldco or any
of their Subsidiaries, or (iii) except as disclosed on Schedule 3.09 any
agreement, indenture, instrument or other document required to be disclosed on
Schedule 6.32(a), 6.32(b), 6.34(a) or 6.34(b), or any judgment, order or decree,
which is binding upon the Company, Oldco or any of their Subsidiaries or any of
their respective properties or (c) require, or result in the creation or
imposition of any Lien on any asset of the Company, Oldco or any of their
Subsidiaries (other than Liens in favor of the Agent (as defined in the Senior
Credit
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Agreement) created pursuant to the Collateral Documents (as defined in
the Senior Credit Agreement)).
(b) Except as disclosed in Schedule 6.02(b) each of the Company, Oldco
and their Subsidiaries immediately before both the First Merger and the Second
Merger, at the Closing Date and immediately after the Post-Merger Redemptions
(i) had, has and will have all Governmental Approvals required under any
Requirement of Law for it to conduct its business, each of which is in full
force and effect, is final and not subject to review on appeal and is not the
subject of any pending or, to the Company's knowledge, threatened attack by
direct or collateral proceeding, (ii) was, is and will be in compliance with
each Governmental Approval applicable to it and in compliance with all other
Requirements of Law relating to it or any of its respective properties and (iii)
had, has and will have timely filed all material reports, documents and other
materials required to be filed by it under any Requirement of Law with any
Governmental Authority and had, has and will have retained all material records
and documents required to be retained by it under any Requirement of Law.
6.03 Governmental Authorization; Third Party Consents. Except as
contemplated by the Transaction Documents, except as disclosed on Schedule 3.09
and except to the extent previously and duly obtained or made and in full force
and effect, no approval, consent, compliance, exemption, authorization or other
action by, or notice to, or filing with, any Governmental Authority or any other
Person in respect of any Requirement of Law or Contractual Obligation, and no
lapse of a waiting period under any Requirement of Law or Contractual Obligation
is necessary or required in connection with the execution, delivery or
performance by the Company, Oldco and each of their Subsidiaries or enforcement
against the Company, Oldco and each of their Subsidiaries of this Agreement, the
other Transaction Documents, the Senior Credit Documents and the Mergers and
Redemptions Documents to which such Person is a party or the transactions
contemplated hereby or thereby.
6.04 Validity and Binding Nature. Each of this Agreement and each
other Transaction Document, Senior Credit Document and Mergers and Redemptions
Document to which the Company, Oldco or any of their Subsidiaries is a party is
the legal, valid and binding obligation of such Person, enforceable against such
Person in accordance with its terms, subject to bankruptcy, insolvency and
similar laws affecting the enforceability of creditors' rights generally and to
general principles of equity.
6.05 Financial Condition.
(a) The audited consolidated financial statements of Oldco and its
Subsidiaries as at December 31, 1999 and the unaudited consolidated financial
statements of Oldco and its Subsidiaries as at March 31, 2000, copies of each of
which have been delivered to each Purchaser, were prepared in accordance with
GAAP (subject in the case of such unaudited statements, to the absence of
footnotes and to normal year-end adjustments) applied on a consistent basis
(subject to the changes in accounting methods noted in the notes to such
December 31, 1999 audited consolidated financial statements) and present fairly
the consolidated financial condition of Oldco
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and its Subsidiaries as at such dates and the results of their operations for
the periods then ended. The unaudited consolidated financial statements of Oldco
and its Subsidiaries as at April 30, 2000 and May 31, 2000, copies of each of
which are attached hereto as Schedule 6.05(a)(1), were prepared in accordance
with GAAP applied on a consistent basis (except as set forth on Schedule
6.05(a)(2)) and present fairly the consolidated financial condition of Oldco and
its Subsidiaries as at such dates and the results of their operations for the
periods then ended.
(b) Except as disclosed in Schedule 6.05(b), the financial
projections of the Company delivered pursuant to Section 3.06(b) were prepared
by the Company and its Subsidiaries on a basis consistent with the financial
statements, in good faith on the basis of information and assumptions that the
Company and its senior management believed to be reasonable as of the date of
such projections and such assumptions are reasonable as of the Closing Date, (it
being understood that projections are subject to significant uncertainties and
contingencies, many of which are beyond the Company's control, and that no
assurance can be given that the projections will be realized).
(c) Except as disclosed in Schedule 6.05(c), the estimated pro forma
unaudited consolidated balance sheet of the Company as of the Closing Date,
adjusted to give effect to the issuance of the Notes and the Warrants, the
purchase of the Purchased Capital Stock and the other transactions contemplated
to occur on the Closing Date pursuant to the Transaction Documents, the Senior
Credit Documents and the Mergers and Redemptions Documents and the application
of the proceeds of the Notes, as prepared by the Company and delivered to the
Purchasers pursuant to Section 3.06(b), presents a good faith estimate of the
pro forma financial condition of the Company and its Subsidiaries (after giving
effect to the above referenced adjustments) and has been prepared in accordance
with GAAP consistently applied.
(d) The Company's, Oldco's and each of their Subsidiaries' books and
records (including all financial records, business records, customer lists,
referral source lists and records pertaining to services or products delivered
to customers) (i) are complete and correct in all respects and all transactions
to which such Person is or has been a party are accurately reflected therein,
(ii) reflect all discounts, returns and allowances granted by such Person with
respect to the periods covered thereby, (iii) have been maintained in accordance
with customary and sound business practices in such Person's industry, (iv) form
the basis for the financial statements and (v) accurately reflect the assets,
liabilities, financial position, results of operations and cash flows of such
Person. All computer-generated reports and other computer output included in
such Person's books and records are complete and correct and were prepared in
accordance with sound business practices based upon authentic data. Such
Person's management information systems are adequate for the preservation of
relevant information and the preparation of accurate reports.
6.06 No Material Adverse Change. Since December 31, 1999, there has
been no material adverse change in the condition (financial or otherwise),
operations, assets, business, properties or prospects of the Company, Oldco and
their Subsidiaries taken as a whole.
6.07 Litigation and Contingent Liabilities. No litigation (including
derivative actions), arbitration proceeding or governmental investigation or
proceeding is pending or, to the Company's knowledge, threatened against the
Company, Oldco or any Subsidiary of either
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which might reasonably be expected to have a Material Adverse Effect, except as
set forth in Schedule 6.07. Except as set forth on Schedule 6.07 or permitted by
Section 10.03, neither the Company, Oldco nor any of their Subsidiaries has any
liability, obligation or commitment of any kind or nature, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, or due or to become due (each a "Liability") (and no
basis exists for any Liability of the Company, Oldco or any of their
Subsidiaries), except for (a) Liabilities reflected or reserved against on the
March 31, 2000 balance sheet and (b) current Liabilities incurred in the
ordinary course of business since March 31, 2000 (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach of a
Contractual Obligation, breach of warranty, tort, infringement, or violation of
a Requirement of Law).
6.08 Ownership of Properties; Liens. The Company owns good and, in the
case of real property, marketable title to all of the properties and assets it
purports to own (including the assets owned by Oldco, Cupertino, Cascade and
Electronics immediately before the Mergers), real and personal, tangible and
intangible, of any nature whatsoever (including patents, trademarks, trade
names, service marks and copyrights), free and clear of all Liens, charges and
claims (including infringement claims with respect to patents, trademarks,
service marks, copyrights and the like) except as permitted by Section 10.08.
6.09 ERISA.
(a) The execution and delivery of this Agreement, each of the other
Transaction Documents, the Senior Credit Documents and the Mergers and
Redemptions Documents, the purchase and sale of the Notes, the Warrants and the
Purchased Capital Stock hereunder and the consummation of the transactions
contemplated hereby and thereby will not result in any prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code or any
other violations of ERISA or any other Requirement of Law related thereto.
(b) During the twelve-consecutive-month period prior to the date of
the execution and delivery of this Agreement, (i) no steps have been taken to
terminate any Pension Plan and (ii) no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which could result in the incurrence by the Company
of any material liability, fine or penalty.
(c) All contributions (if any) have been made to any Multiemployer
Pension Plan that are required to be made by the Company, Oldco or any other
member of the Controlled Group under the terms of the plan or any collective
bargaining agreement or by any Requirement of Law; neither the Company, Oldco
nor any member of the Controlled Group has withdrawn or partially withdrawn from
any Multiemployer Pension Plan, incurred any withdrawal liability with respect
to any such plan or received notice of any claim or demand for withdrawal
liability or partial withdrawal liability from any such plan, the consummation
of the Mergers and Redemptions and the other transactions contemplated hereby
will not result in the Company's incurring any withdrawal liability under any
such plan and no condition has occurred which, if continued, might result in a
withdrawal or partial withdrawal from any such plan; and neither the
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Company, Oldco nor any member of the Controlled Group has received any notice
that any Multiemployer Pension Plan is in reorganization, that increased
contributions may be required to avoid a reduction in plan benefits or of the
imposition of any excise tax, that any such plan is or has been funded at a rate
less than that required under Section 412 of the Code, that any such plan is or
may be terminated, or that any such plan is or may become insolvent.
6.10 Investment Company Act. Neither the Company, Oldco nor any
Subsidiary of either is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940.
6.11 Public Utility Holding Company Act. Neither the Company, Oldco
nor any Subsidiary of either is a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Company Act of 1935.
6.12 Use of Proceeds. No part of the proceeds of the Notes or the
Warrants will be used for any purpose which violates, or which would be
inconsistent with, the provisions of Regulations T, U or X of the Board of
Governors of the Federal Reserve System.
6.13 Taxes. Except as set forth on Schedule 6.13, each of the Company,
Oldco, and each Subsidiary thereof of either has filed all tax returns and
reports required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.
6.14 Solvency, etc. Immediately before both the First Merger and the
Second Merger, currently, immediately after the Post-Merger Redemptions and
immediately prior to and after giving effect to the issuance of the Notes and
the Warrants and the use of the proceeds thereof, (i) the Company, Oldco and
each of their Subsidiaries will each have assets (tangible and intangible)
having a value, both at fair valuation and at present fair salable value, in
excess of its debts (including contingent, subordinated, disputed, unmatured and
unliquidated liabilities) and (ii) the Company, Oldco and their Subsidiaries
taken as a whole, will be solvent, will be able to pay their debts as they
mature, and will have capital which is not unreasonably small to carry on its
business as then constituted.
6.15 Environmental Matters.
(a) No Violations. Except as set forth on Schedule 6.15, neither the
Company, Oldco nor any Subsidiary of either, nor any operator of the Company's,
Oldco's or any of their Subsidiary's properties, is in violation, or alleged
violation, of any judgment, decree, order, law, permit, license, rule or
regulation pertaining to environmental matters, including those arising under
the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 or any other Environmental
Law.
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(b) Notices. Except as set forth on Schedule 6.15 and for matters
arising after the Closing Date, neither the Company, Oldco nor any Subsidiary of
either has received notice from any third party, including any Federal, state or
local governmental authority: (i) that any one of them has been identified by
the U.S. Environmental Protection Agency as a potentially responsible party
under CERCLA with respect to a site listed on the National Priorities List, 40
C.F.R. Part 300 Appendix B; (ii) that any hazardous waste, as defined by 42
U.S.C. Section 6903(5), any hazardous substance as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section 9601(33)
or any toxic substance, oil or hazardous material or other chemical substance
regulated by any Environmental Law (all of the foregoing "Hazardous Substances")
which any one of them has generated, transported or disposed of has been found
at any site at which a Federal, state or local agency or other third party has
conducted a remedial investigation, removal or other response action pursuant to
any Environmental Law; (iii) that the Company, Oldco or any Subsidiary of either
must conduct a remedial investigation, removal, response action or other
activity pursuant to any Environmental Law; or (iv) of any Environmental Claim.
(c) Handling of Hazardous Substances. Except as set forth on Schedule
6.15, (i) no portion of the real property or other assets of the Company, Oldco
or any Subsidiary of either has been used for the handling, processing, storage
or disposal of Hazardous Substances except in accordance in all material
respects with applicable Environmental Laws; and no underground tank or other
underground storage receptacle for Hazardous Substances is located on such
properties; (ii) in the course of any activities conducted by the Company,
Oldco, any Subsidiary of either or the operators of any real property of the
Company, Oldco or any Subsidiary of either, no Hazardous Substances have been
generated or are being used on such properties except in accordance in all
material respects with applicable Environmental Laws; (iii) there have been no
Releases or threatened Releases of Hazardous Substances on, upon, into or from
any real property or other assets of the Company, Oldco or any Subsidiary of
either; (iv) there have been no Releases on, upon, from or into any real
property in the vicinity of the real property or other assets of the Company,
Oldco or any Subsidiary of either which, through soil or groundwater
contamination, may have come to be located on, and which might reasonably be
expected to have a material adverse effect on the value of, the real property or
other assets of the Company, Oldco or any Subsidiary of either; and (v) any
Hazardous Substances generated by the Company, Oldco and their Subsidiaries have
been transported offsite only by properly licensed carriers and delivered only
to treatment or disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities have been and
are operating in compliance in all material respects with such permits and
applicable Environmental Laws.
6.16 Insurance. Set forth on Schedule 6.16 is a complete and accurate
summary of the property and casualty insurance program of the Company and its
Subsidiaries as of the Closing Date (including the names of all insurers, policy
numbers, expiration dates, amounts and types of coverage, annual premiums,
exclusions, deductibles, self-insured retention, and a description in reasonable
detail of any self-insurance program, retrospective rating plan, fronting
arrangement or other risk assumption arrangement involving the Company or any
Subsidiary). Such insurance is of a scope and amount customary and reasonable
for the businesses in which the Company, Oldco and their
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Subsidiaries have engaged. The Company, Oldco and each of their Subsidiaries is
in compliance with all obligations relating to insurance created by Requirements
of Law or any Contractual Obligation.
6.17 Real Property. Set forth on Schedule 6.17 is a complete and
accurate list, as of the Closing Date, of the addresses of all real property
owned, leased or otherwise used or occupied by the Company, Oldco or any
Subsidiary of either, together with, in the case of leased property, the name
and mailing address of the lessor of such property. The leasehold interest of
the Company, Oldco or their Subsidiaries with respect to each parcel of leased
real property is free and clear of all Liens, except Permitted Liens. Except for
the sublease by the Company of 653 and 657 Harrison Street, San Francisco,
California, neither the Company, Oldco nor any of their Subsidiaries is a
sublessor of, or has assigned any lease covering, any parcel of leased real
property identified on Schedule 6.17. Leasing commissions or other brokerage
fees due from or payable by the Company, Oldco or any of their Subsidiaries with
respect to any lease of real property identified on Schedule 6.17 have been paid
in full. Neither the Company, Oldco nor any of their Subsidiaries is a party to
or bound by any Contractual Obligation (including any option) for the purchase
of any real estate interest or any Contractual Obligation for the lease to the
Company, Oldco or any of their Subsidiaries of any real estate interest not
currently in possession of the Company, Oldco or any of their Subsidiaries.
6.18 Information. All quarterly and annual, and commencing in April of
fiscal year 2001, monthly financial statements hereafter furnished by the
Company will be prepared in accordance with GAAP (subject in the case of
unaudited statements, to the absence of footnotes and to normal year-end
adjustments) applied on a consistent basis (subject to any future changes in
accounting methods noted therein and recommended by the accountants to the
Company) and will present fairly the consolidated financial condition of the
Company and its Subsidiaries, as the case may be, as at the dates and the
results of their operations for the periods stated. All financial projections
hereafter furnished by the Company will be prepared by the Company and its
Subsidiaries, as the case may be, in good faith on the basis of information and
assumptions that the Company and its senior management believe to be reasonable
as of the date of such projections (it being understood that projections are
subject to significant uncertainties and contingencies, many of which are beyond
the Company's control, and no assurance can be given that the projections will
be realized and actual results during the period or periods covered by any such
projections and forecasts). All other information heretofore furnished in
writing by the Company, Oldco or any Subsidiary of either to any Purchaser for
purposes of or in connection with the Transaction Documents and the transactions
contemplated thereby is true and accurate in every material respect on the date
as of which such information is dated or certified, and none of such information
is or will be incomplete by omitting to state any material fact necessary to
make such information not misleading in light of the circumstances under which
made, except, in both cases, to the extent such information has been modified or
superceded by subsequent written information furnished to the Holders by the
Company, Oldco or any of their Subsidiaries (it being understood that
projections are subject to significant uncertainties and contingencies, many of
which are beyond the Company's control, and no assurance can be given that the
projections will be realized and actual results during the period or periods
covered by any such projections may differ from projected or forecasted
results). All information contemporaneously herewith furnished in writing by the
Company, Oldco or any Subsidiary of either to the Holders for purposes of or in
connection with the Transaction Documents and the transactions
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contemplated thereby is, and all other written information hereafter furnished
by or on behalf of the Company, Oldco or any Subsidiary thereof to the Holders
pursuant hereto or in connection herewith will be, true and accurate in every
material respect on the date as of which such information is dated or certified,
and none of such information is or will be incomplete by omitting to state any
material fact necessary to make such information not misleading in light of the
circumstances under which made (it being understood that projections are subject
to significant uncertainties and contingencies, many of which are beyond the
Company's control, and no assurance can be given that the projections will be
realized and actual results during the period or periods covered by any such
projections may differ from projected or forecasted results).
6.19 Intellectual Property. The Company owns and possesses or has a
license or other rights to use all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, service marks, service mark rights and
copyrights and other intellectual property rights as are necessary for the
conduct of the business of the Company without any infringement upon rights of
others. No event has occurred which permits, or after notice or lapse of time or
both would permit, the revocation or termination of any such rights. Each such
right owned or used by the Company, Oldco or any of their Subsidiaries
immediately before the Mergers and Redemptions will be owned or available for
use by the Company on identical terms and conditions immediately after the
Post-Merger Redemptions. To the knowledge of the Company, no third party is
infringing upon any intellectual property right of the Company.
6.20 Burdensome Obligations; Disclosure. Neither the Company, Oldco
nor any Subsidiary of either is a party to any Contractual Obligation or subject
to any corporate or partnership restriction which might reasonably be expected
to have a Material Adverse Effect. There is no other fact known to the Company
which the Company has not disclosed to the Purchasers in writing which has had
or could reasonably be expected to have a Material Adverse Effect.
6.21 Labor Matters. Except as set forth on Schedule 6.21, neither the
Company, Oldco nor any Subsidiary of either is subject to any labor or
collective bargaining agreement. There are no existing or threatened strikes,
lockouts or other labor disputes involving the Company, Oldco or any Subsidiary
of either. Hours worked by and payment made to employees of the Company, Oldco
and their Subsidiaries are not in violation of the Fair Labor Standards Act or
any other applicable law, rule or regulation dealing with such matters. Neither
the Company, Oldco nor any of their Subsidiaries has committed any unfair labor
practice. To the knowledge of the Company, no employee of the Company, Oldco or
any of their Subsidiaries is subject to any Contractual Obligation that (A)
restricts or limits in any way the scope or type of work in which the employee
may be engaged other than for the benefit of the Company, Oldco or any of their
Subsidiaries or (B) requires the employee to transfer, assign or disclose
information concerning the employee's work to anyone other than the Company,
Oldco or any of their Subsidiaries. To the knowledge of the Company, no officer,
key employee or group of employees of the Company, Oldco or any of their
Subsidiaries has any plans to terminate employment with such Person.
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6.22 No Default. No Event of Default or circumstance that with notice
or passage of time or both would constitute an Event of Default exists or would
result from the incurring by the Company of any Indebtedness hereunder.
6.23 [INTENTIONALLY RESERVED].
6.24 [INTENTIONALLY RESERVED].
6.25 Accounts Receivable. All accounts receivable of the Company,
Oldco and each of their Subsidiaries (collectively, the "Accounts Receivable")
represent valid obligations arising from products or services actually sold by
the Company, Oldco or one of their Subsidiaries in the ordinary course of
business. The Accounts Receivable are current and collectible in accordance with
their terms net of a reserve of $728,975. Except as set forth on Schedule 6.25,
there is no contest, claim, or right to set-off, other than returns in the
ordinary course of business, under any Contractual Obligation with any obligor
of an Accounts Receivable relating to the amount or validity of such Accounts
Receivable.
6.26 Capitalization. The authorized Capital Stock of the Company,
Oldco and each of their Subsidiaries and the issued and outstanding shares
thereof and reserved shares thereof (including the record and beneficial owners
thereof) immediately before the First Merger, immediately before the Pre-Merger
Redemptions, immediately before the Second Merger, immediately before the
Closing, immediately after the Closing and immediately after the Post-Merger
Redemptions were, are or will be as described on Schedule 6.26. At each such
time, all outstanding shares of Capital Stock of the Company, Oldco and each of
their Subsidiaries are, were or will be, as the case may be, duly authorized and
validly issued, fully paid, nonassessable and free and clear of any Lien created
by the Company, Oldco or any of their Subsidiaries. The Purchased Capital Stock
issued by the Company to the Purchasers is duly authorized, fully paid,
nonassessable and free and clear of any Lien. The Common Stock to be issued upon
exercise of the Warrants will be validly authorized and, when issued upon due
exercise of the Warrants (including payment of the exercise price set forth
therein), will be fully paid, nonassessable and free and clear of any Lien. The
Common Stock to be issued pursuant to Section 3 and Section 7 of the Investor
Rights Agreement (if any) will be validly authorized and, when issued, if ever,
will be fully paid, nonassessable and free and clear of any Lien. Except as
described in Schedule 6.26 or as set forth in the Transaction Documents, (a) no
other Capital Stock of the Company, Oldco or any of their Subsidiaries is
authorized or outstanding, (b) neither the Company, Oldco nor any of their
Subsidiaries has outstanding any rights (either preemptive or other) or options
to subscribe for or purchase from the Company, Oldco or any of their
Subsidiaries any warrants or other agreements providing for or requiring the
issuance by the Company, Oldco or any of their Subsidiaries of, any Capital
Stock, (c) none of the Company, Oldco, any of their Subsidiaries or any of their
shareholders is a party to any agreement with respect to the voting or transfer
of the Capital Stock of the Company, Oldco or any of their Subsidiaries and (d)
neither the Company, Oldco nor any of their Subsidiaries is under any obligation
to register under the Securities Act or under any other securities law, any of
its presently outstanding securities or any securities that may be subsequently
issued. The number of shares of Common Stock issuable upon exercise of the
Warrants represent six and three-tenths percent (6 3/10%) of all the shares of
Common Stock of the Company on a Fully Diluted basis as of the Closing Date
(after taking into effect the
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Merger and Redemptions and the issuance of the Warrants). The number of shares
of Common Stock issuable upon exercise of the Warrants assuming that the Notes
are not prepaid in part or in full on or prior to the date that is eighteen
months from the date hereof would represent seven and seven-tenths percent (7
7/10%)of all the shares of Common Stock of the Company on a Fully Diluted basis
as of the Closing Date (after taking into effect the Merger and Redemptions and
the issuance of the Warrants). The number of shares of Common Stock issuable
upon exercise of the Warrants assuming that the Notes are not prepaid in part or
in full on or prior to the date that is twenty-four months from the date hereof
would represent nine and one-tenths percent (9 1/10%) of all the shares of
Common Stock of the Company on a Fully Diluted basis as of the Closing Date
(after taking into effect the Merger and Redemptions and the issuance of the
Warrants).
6.27 Warranties. Except as set forth in Schedule 6.27, each product
sold, leased, or delivered and each service rendered by the Company, Oldco or
any of their Subsidiaries has been in conformity with all applicable contractual
commitments and all express and implied warranties, and neither the Company,
Oldco nor any of their Subsidiaries has any Liability (and there is no basis for
any present or future claim, action or other proceeding against any of them that
could give rise to any Liability) for replacement or repair thereof or other
damages in connection therewith net of project manager reserves of approximately
$220,000. Except as set forth on Schedule 6.27, neither the Company, Oldco nor
any of their Subsidiaries has any Liability (and there is no basis for any
present or future claim, action or other proceeding against any of them that
could give rise to any Liability) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product sold,
leased, or delivered by the Company, Oldco or any of their Subsidiaries.
6.28 Investments. Set forth in Schedule 6.28 is a complete and correct
list of all Investments (other than Permitted Investments) held by the Company
in any Person on the date hereof and, for each such Investment, (x) the identity
of the Person or Persons holding such Investment and (y) the nature of such
Investment. Except as disclosed in Schedule 6.28, the Company owns, free and
clear of all Liens, all such Investments.
6.29 Customers and Suppliers. Schedule 6.29 lists (i) the twenty-five
largest (by dollar volume) customers of the Company, Oldco and each of their
Subsidiaries during the period from January 1, 1995 to December 31, 1999 and
during fiscal year 1999 (showing the dollar volume for each) and (ii) the ten
largest (by dollar volume) suppliers of the Company, Oldco and each of their
Subsidiaries during each of fiscal year 1997, fiscal year 1998 and fiscal year
1999 (showing the dollar volume for and a summary of the credit terms provided
by each). Since December 31, 1999, no customer or supplier listed on Schedule
6.29 has canceled or otherwise modified in any material respect its relationship
with the Company, Oldco or any of their Subsidiaries and neither the Company,
Oldco nor any of their Subsidiaries has received any notice nor is it otherwise
aware that any such customer or supplier intends to cancel or otherwise modify
in any material respect its relationship with the Company, Oldco or any of their
Subsidiaries.
6.30 Transactions with Related Persons. Except as set forth in
Schedule 6.30, for the past three years, no shareholder of the Company, Oldco or
any of their Subsidiaries or any Related Person of any such shareholder or of
the Company, Oldco or any of their Subsidiaries has (a) had any interest in any
asset used in the business of the Company, Oldco or any of their Subsidiaries,
(b)
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been involved in any business arrangement, relationship or transaction with the
Company, Oldco or any of their Subsidiaries or (c) engaged in competition with
the Company, Oldco or any of their Subsidiaries. Except as set forth in Schedule
6.30, (A) no such shareholder or any Related Person of any such shareholder or
of the Company, Oldco or any of their Subsidiaries (i) is a party to any
contract with, or has any claim or right against (including contingent
reimbursement obligations, such as upon payment of a guarantee of the Company's
Indebtedness), the Company, Oldco or any of their Subsidiaries or (ii) has any
Indebtedness owing to the Company, Oldco or any of their Subsidiaries and (B)
neither the Company, Oldco nor any of their Subsidiaries (i) has any claim or
right against (including contingent reimbursement obligations, such as upon
payment of a guarantee of a stockholder's Indebtedness) any such stockholder or
any Related Person of any such stockholder or of the Company, Oldco or any of
their Subsidiaries and (ii) owes any Indebtedness to any such stockholder or any
Related Person of any such stockholder or of the Company, Oldco or any of their
Subsidiaries.
6.31 Private Offering. No form of general solicitation or general
advertising was used by the Company, the Selling Shareholders or their
representatives in connection with the offer or sale of the Notes, the Warrants
or the Purchased Capital Stock. Assuming the truth of the representations made
in Article VII, no registration of the Notes, the Warrants or the Purchased
Capital Stock pursuant to the provisions of the Securities Act or any state
securities or "blue sky" laws will be required by the offer, sale or issuance of
the Notes, the Warrants, the shares of Common Stock issuable upon exercise of
the Warrants or the Purchased Capital Stock.
6.32 Contractual Obligation; Performance Bonds.
(a) Except for the Transaction Documents, the Senior Credit Documents
and the Mergers and Redemptions Documents, Schedule 6.32(a) hereto sets forth a
complete and accurate list of all material Contractual Obligations of the
Company, Oldco and their Subsidiaries including, without limitation: (i)
contracts or agreements not covered by clauses (ii) to (xi) below pursuant to
which the Company, Oldco or any of their Subsidiaries receives revenues or has
expenses in excess of $2,000,000 per fiscal year (ii) employment, consulting,
non-competition, or severance contracts involving employees of the Company,
Oldco or any of their Subsidiaries; (iii) license agreements; (iv) partnership
or joint venture agreements; (v) guarantees of obligations of $2,000,000 or
more; (vi) contracts with any Governmental Authority; (vii) contracts with major
suppliers; (viii) agreements pursuant to which the Company, Oldco or any of
their Subsidiaries acquired any businesses or significant assets; (ix) contracts
with any bonding companies; (x) contracts with any major customer pursuant to
which the Company, Oldco or any of their Subsidiaries receives revenues in
excess of $5,000,000; (xi) each lease of real property of 20,000 square feet or
more and (xii) all commitments and agreements to enter into any of the
foregoing. Each such Contractual Obligation (including Contractual Obligations
evidencing Indebtedness and Liens) is, and immediately after the Closing and the
Post-Merger Redemptions will be, valid, enforceable and in full force and effect
in accordance with the terms thereof, and there are no, and immediately after
the Closing and the Post-Merger Redemptions there will not be, any defaults,
with or without notice or lapse of time or both, by the Company, Oldco or any of
their Subsidiaries or, to the knowledge of the Company, by any other party under
any such Contractual Obligation.
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(b) Schedule 6.32(b) sets forth the Company's, Oldco's and each of
their Subsidiaries' currently outstanding performance bonds specifically
identifying the amount thereof, the Contractual Obligation to which such
performance bond relates (each a "Bonded Contract") and the amount of work (in
dollars) remaining to be performed under the related Bonded Contract. Neither
the Company, Oldco nor any of their Subsidiaries is in default under any Bonded
Contract. Neither the Company, Oldco nor any of their Subsidiaries has ever
failed to satisfactorily complete performance under a Bonded Contract nor does
the Company currently anticipate that the Company, Oldco or any of their
Subsidiaries will for any reason be unable to satisfactorily perform under any
Bonded Contract and no claim for indemnification has ever been asserted by any
party in connection with a Bonded Contract.
6.33 Mergers and Redemptions Documents; Senior Credit Documents. The
Company has delivered to the Purchasers true, complete and correct copies of the
Mergers and Redemptions Documents and the Senior Credit Documents, together with
all amendments and modifications thereto. Such documents (including the
schedules and exhibits thereto) comprise a full and complete copy of all
material agreements with respect to the subject matter thereof and all
transactions related thereto, and there are no material agreements or
understandings, oral or written, or side agreements not contained therein that
relate to or modify the substance thereof. The Mergers and Redemptions Documents
and the Senior Credit Documents have been duly authorized by all necessary
corporate action on the part of the Company, Oldco and each of their
Subsidiaries, and, when executed and delivered by such Persons, will be the
legal, valid and binding obligations of such Persons, enforceable in accordance
with their terms. The Company, Oldco and each of their Subsidiaries is not in
default under any covenants under the First Merger Agreement or the Second
Merger Agreement or under the Senior Credit Agreement, with or without notice or
lapse of time or both.
6.34 Debt Agreements.
(a) Schedule 6.34(a) is a complete and correct list of each credit
agreement, loan agreement, indenture, purchase agreement, guarantee, letter of
credit or other arrangement providing for or otherwise relating to any
Indebtedness or any extension of credit (or commitment for any extension of
credit) to, or guarantee by, the Company, Oldco or any of their Subsidiaries,
outstanding on the date hereof, and the aggregate principal or face amount
outstanding or that may become outstanding under each such arrangement is
correctly described in Schedule 6.34(a). There exists no, and immediately after
the Effective Time there will not be any, default under the provisions of any
instrument evidencing or securing any Indebtedness of the Company, Oldco and
their Subsidiaries or of any agreement otherwise relating thereto.
(b) Schedule 6.34(b) is a complete and correct list of each Lien
securing Indebtedness of any Person outstanding on the date hereof and covering
any property of the Company, Oldco or any of their Subsidiaries, and the
aggregate Indebtedness secured (or that may be secured) by each such Lien and
the property covered by each such Lien is correctly described in Schedule
6.34(b).
6.35 Broker's, Finder's or Similar Fees. Except as set forth in Schedule
6.35, there are no brokerage commissions, finder's fees or similar fees or
commissions payable in connection
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with this Agreement, any other Transaction Document, any Senior Credit Document,
any Mergers and Redemptions Document or any transaction contemplated hereby or
thereby, based on any agreement, arrangement or understanding with the Company,
Oldco or any of their Subsidiaries or any action taken by the Company, Oldco or
any of their Subsidiaries.
ARTICLE VII
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents and
warrants to the Company, as of the Closing Date, as follows:
7.01 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement and the other Transaction
Documents to which such Purchaser is a party, and the transactions contemplated
hereby and thereby, (a) is within such Purchaser's power and authority and has
been duly authorized by all necessary action, (b) does not contravene the terms
of such Purchaser's organizational documents or any amendment thereof and (c)
will not violate, conflict with or result in any breach or contravention of any
Contractual Obligation of such Purchaser or any Requirement of Law directly
relating to such Purchaser.
7.02 Binding Effect. This Agreement, and the other Transaction
Documents to which such Purchaser is a party have been duly executed and
delivered by such Purchaser, and this Agreement and the other Transaction
Documents to which such Purchaser is a party constitute the legal, valid and
binding obligations of such Purchaser enforceable against it in accordance with
its terms.
7.03 Accredited Investor; Purchase for Own Account. Such Purchaser is
an "accredited investor" within the meaning of Regulation D under the Securities
Act. The Notes, the Warrants and the Purchased Capital Stock are being or will
be acquired for its own account and with no intention of distributing or
reselling such securities or any part thereof in any transaction that would be
in violation of the Securities Act or the securities laws of any state, without
prejudice, however, to the rights of such Purchaser at all times to sell or
otherwise dispose of all or any part of the Notes, the Warrants, the shares of
Common Stock issued upon exercise of the Warrants or the Purchased Capital Stock
under an effective registration statement under the Securities Act, or under an
exemption from such registration available under the Securities Act. If such
Purchaser should in the future decide to dispose of the Notes, the Warrants, the
shares of Common Stock issued upon exercise of the Warrants or the Purchased
Capital Stock, such Purchaser understands and agrees that it may do so only in
compliance with the Securities Act and applicable state securities laws, as then
in effect. Such Purchaser agrees to the imprinting, so long as required by law,
of a legend on the Notes, the Warrants, the shares of Common Stock issued upon
exercise of the Warrants and the Purchased Capital Stock to the following
effect:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
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ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS."
7.04 ERISA. No part of the funds used by such Purchaser to purchase
the Notes or the Warrants hereunder constitutes assets of any Pension Plan or
any "plan" (as defined in Section 4975 of the Code).
7.05 Broker's, Finder's or Similar Fees. Except for the funding fee
payable pursuant to Section 15.17, there are no brokerage commissions, finder's
fees or similar fees or commissions payable in connection with the transactions
contemplated hereby, or by any other Transaction Document to which such
Purchaser is a party, based on any agreement, arrangement or understanding with
such Purchaser or any action taken by such Purchaser.
7.06 Governmental Authorization; Third Party Consent. Except as
contemplated by the Transaction Documents, no approval, consent, compliance,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person in respect of any Requirement of Law
or Contractual Obligation, and no lapse of a waiting period under any
Requirement of Law or Contractual Obligation, is necessary or required in
connection with the execution, delivery or performance by such Purchaser or
enforcement against such Purchaser of this Agreement and the other Transaction
Documents to which it is a party or the transactions contemplated hereby or
thereby.
7.07 Corporate Existence and Power. Such Purchaser (a) is a limited
partnership, general partnership or limited liability company duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or formation and (b) has the power and authority to execute,
deliver and perform its obligations under this Agreement and each other
Transaction Document to which it is a party.
ARTICLE VIII
FINANCIAL INFORMATION AND NOTICES
8.01 Financial Statements and Other Information (Pre-Note Payoff and
Public Offering). Until the later of (the "Note Payoff and QPO Date") (i) such
time as the Company has paid all principal of and interest and Premium on the
Notes and all other amounts due under this Agreement and the Notes and (ii) the
closing of a Qualified Public Offering, the Company hereby covenants and agrees
to deliver to each Purchaser and each Holder the following:
(a) Monthly Financials. As soon as available, but in any event within
thirty (30) days after the end of each fiscal month of the Company, copies of
such summary financial reports regarding the results of operations of the
Company as are prepared for senior management of the Company and no later than
the beginning of fiscal month April, 2001, within thirty (30) days after the end
of each fiscal month of the Company thereafter, the unaudited consolidated and
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consolidating balance sheets of the Company and its Subsidiaries as of the end
of such month and the related unaudited consolidated and consolidating
statements of earnings, shareholders' equity and cash flows for such month and
for the portion of the fiscal year ended with the last day of such month,
setting forth in each case comparative figures for the corresponding month in
the prior fiscal year and for the corresponding month in the Company's budget
provided pursuant to Section 8.02(a), all of which shall be certified by the
chief financial officer or equivalent officer of the Company, subject to normal
year-end audit adjustments; and
(b) Quarterly Financials. As soon as available, but in any event
within forty-five (45) days after the end of each fiscal quarter of the Company,
the unaudited consolidated and consolidating balance sheets of the Company and
its Subsidiaries as of the end of such quarter and the related unaudited
consolidated and consolidating statements of operations, cash flows and
shareholders' equity for such quarter and for the portion of the fiscal year
ended with the last day of such quarter, setting forth in each case comparative
figures for the corresponding quarter in the prior fiscal year and for the
corresponding quarter in the Company's budget provided pursuant to Section
8.02(a), all of which shall be certified by the chief financial officer or
equivalent officer of the Company, subject to normal year-end audit adjustments
(and the absence of footnotes and presentation items); and
(c) Year-End Financials. As soon as available, but in any event
within ninety (90) days after the end of each fiscal year of the Company, the
consolidating and consolidated balance sheet of the Company and its Subsidiaries
as at the end of such year and the related consolidating and consolidated
statements of operations, cash flows and shareholders' equity for such year,
setting forth in each case comparative figures for the previous year and
budgeted figures for such period as set forth in the respective budget delivered
pursuant to Section 8.02(a). All such financial statements shall be complete and
correct in all material respects and shall be prepared in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by the accountants preparing such statements or the
chief financial officer, as the case may be, and disclosed therein) and, in the
case of the consolidated financial statements, accompanied by a report thereon
of Boitano, Sargent and Lawrence, CPAs, or of independent certified public
accountants of recognized national standing, which report shall state that such
financial statements present fairly the financial position of the Company and
its Subsidiaries as at the dates indicated and the results of their operations
and cash flow for the periods indicated in conformity with GAAP, that the
examination by such accountants in connection with such financial statements has
been made in accordance with GAAS; and
(d) Compliance Certificate. Together with each delivery of financial
statements pursuant to Sections 8.01(a), 8.01(b) and 8.01(c) above, a fully and
properly completed compliance certificate signed by the chief executive officer
or chief financial officer or equivalent officer of the Company certifying that
the Company is in compliance in all material respects with each of the covenants
contained in Articles VIII, IX and X hereof; and
(e) Accountants' Reports. Promptly upon receipt thereof, copies of
all significant reports submitted to the Company or any of its Subsidiaries by
independent public accountants in connection with each annual, interim or
special audit of the financial statements of the Company
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and its Subsidiaries made by such accountants, including the comment letter
submitted by such accountants to management in connection with their annual
audit; and
(f) Management Report. Together with each delivery of financial
statements pursuant to Section 8.01(a), (b) and (c) above, a management report:
(i) describing the operations and financial condition of the Company and its
Subsidiaries for the quarter then ended and the portion of the current fiscal
year then elapsed (or for the fiscal year then ended in the case of year-end
financials), (ii) setting forth in comparative form the corresponding figures
for the corresponding periods of the previous fiscal year and the corresponding
figures from the most recent board-approved budget for the current fiscal year
delivered to such Holder or Purchaser pursuant to Section 8.02(a) and (iii)
discussing the reasons for any significant variations from such projections. The
information above shall be presented in reasonable detail and shall be certified
by the chief financial officer or equivalent officer of the Company to the
effect that such historical information (including the financial statements of
the Company delivered pursuant to Section 8.01(a), (b) and (c)) fairly presents
the results of operations and financial condition of the Company and its
Subsidiaries, if any, as at the dates and for the periods indicated, except for
normal year-end audit adjustments (and absence of footnotes and presentation
items, in the case of quarterly financials).
8.02 Financial Statements and Other Information. Until the latest of
(the "Covenant Expiration Date") (i) such time as the Company has paid all
principal of and interest and Premium on the Notes and all other amounts due
under this Agreement and the Notes, (ii) such time when all of the Warrant
Securities no longer remain outstanding or have been sold in a Public Offering
or pursuant to Rule 144 of the Securities Act and (iii) such time when all of
the shares of Purchased Capital Stock no longer remain outstanding or have been
sold in a Public Offering or pursuant to Rule 144 of the Securities Act, the
Company hereby covenants and agrees to deliver to each Purchaser (if then a
Holder) and each Holder holding more than 20% of the Indebtedness represented by
the Notes or more than 20% of the then outstanding Purchased Capital Stock and
Warrant Securities (treating the Warrants as having been converted into Common
Stock) the following:
(a) Budgets. As soon as available and in any event not later than thirty
(30) days after the last day of each fiscal year of the Company, an annual
budget in the form prepared for the Company's board of directors (including
budgeted balance sheets, income, cash flows, retained earning and shareholders'
equity, and statements of sales and gross margin) prepared by the Company for
each fiscal quarter for the remainder of fiscal year 2000 and the first fiscal
quarter of 2001 and each fiscal month for the second fiscal quarter of 2001 and
beyond of the following fiscal year, prepared in reasonable detail, with
appropriate presentation and discussion of the principal assumptions upon which
such budget is based, which shall be accompanied by the statement of the chief
executive officer or chief financial officer of the Company to the effect that,
to the best of his knowledge, such budget is a reasonable estimate for the
periods respectively covered thereby (it being understood that projections are
subject to significant uncertainties and contingencies, many of which are beyond
the Company's control, and no assurance can be given that the projections will
be realized and actual results during the period or periods covered by any such
projections and forecasts may differ from projected or forecasted results); and
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(b) SEC Filings and Press Releases. Promptly upon their becoming
available, copies of all regular and periodic reports and all registration
statements and prospectuses, if any, filed by the Company or any Subsidiary
thereof with any securities exchange or with the Commission and any press
release or other written or electronic information publicly disseminated by the
Company or any of its Subsidiaries to the business or financial media; and
(c) Other Information. With reasonable promptness, (i) such other
information and data with respect to the Company and its Subsidiaries as from
time to time may be reasonably requested by any Purchaser or any Holder entitled
to information under this Article VIII and (ii) copies of all other financial
information, reports and notices provided by the Company and its Subsidiaries
pursuant to the Senior Credit Documents; and
(d) Notices. Prompt (but in no event later than ten (10) days after
an officer of the Company obtains knowledge thereof) written notice of:
(i) the commencement of all proceedings and investigations by or
before any Governmental Authority (including any notice of violation of
any Requirement of Law) and all actions and proceedings in any court or
before any arbitrator against or involving the Company or any Subsidiary
thereof or any of its or their respective properties, assets or
businesses, in each case involving a claim or liability that could
reasonably be expected to exceed $1,000,000,
(ii) any labor controversy that has resulted in or threatens to
result in, a strike or other work action against the Company or any
Subsidiary thereof,
(iii) any attachment, judgment, levy or order assessed against
the Company or any Subsidiary thereof, in each case involving a claim or
liability that could reasonably be expected to exceed $500,000,
(iv) the institution of any steps by any member of the
Controlled Group or any other Person to terminate any Pension Plan, or
the failure of any member of the Controlled Group to make a required
contribution to any Pension Plan (if such failure is sufficient to give
rise to a Lien under Section 302(f) of ERISA) or to any Multiemployer
Pension Plan, or the taking of any action with respect to a Pension Plan
which could result in the requirement that the Company furnish a bond or
other security to the PBGC or such Pension Plan, or the occurrence of
any event with respect to any Pension Plan or Multiemployer Pension Plan
which could result in the incurrence by any member of the Controlled
Group or any material liability, fine or penalty (including any claim or
demand for withdrawal liability or partial withdrawal from any
Multiemployer Pension Plan, or any material increase in the contingent
liability of the Company with respect to any post-retirement welfare
plan benefit, or any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of an excise tax, that any
such plan is or has been funded at a rate less than that required under
Section 412 of the Code, that any such plan is or may be terminated, or
that any such plan is or may become insolvent,
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(v) any Event of Default, or any event which constitutes or
which with the passage of time or giving of notice or both would
constitute an Event of Default,
(vi) written notice of any kind given or received by the
Company, or any Subsidiary thereof, of any default under the Senior
Credit Documents,
(vii) any notice given or received by the Company of any event
of default, or any event which constitutes or which with the passage of
time or giving of notice or both would constitute a default or event of
default under any agreement or instrument evidencing any Senior
Indebtedness (as defined in Article XII of this Agreement),
(viii) any cancellation (to the extent not contemporaneously
replaced by comparable coverage) or material adverse change in any
insurance maintained by the Company or any Subsidiary thereof, or
(ix) any other event (including (i) any violation of any
Environmental Law or the incurrence of any Environmental Liability or
(ii) the enactment or effectiveness of any Requirement of Law) which
might reasonably be expected to have a Material Adverse Effect.
(e) Aging, WIP and Backlog Reports. Within forty-five (45) days of the
end of each fiscal quarter, reports as to accounts receivable aging, accounts
payable aging, work-in-process and backlog, as at the end of such fiscal
quarter, in form and substance satisfactory to each Purchaser.
ARTICLE IX
AFFIRMATIVE COVENANTS
9.01 Pre-Note Payoff and Public Offering. Until the Note Payoff and
QPO Date, the Company hereby covenants and agrees with each Holder as follows:
(a) Preservation of Corporate Existence and Related Matters. Except
for such changes contemplated by the Merger and Redemptions Documents and as
permitted by Section 10.01, the Company and each Subsidiary thereof shall
preserve and maintain its separate corporate existence and all rights,
franchises, licenses and privileges necessary to the conduct of its business;
and qualify and remain qualified as a foreign corporation and authorized to do
business in each jurisdiction in which (i) the character of its properties or
the nature of its business requires such qualification or authorization and (ii)
where failure to qualify would have a Material Adverse Effect.
(b) Maintenance of Property. The Company and each Subsidiary thereof
shall protect and preserve all properties necessary and material to its
business, including copyrights, patents, trade names and trademarks and other
intellectual property rights; maintain in good working order and condition all
buildings, equipment and other tangible real and personal property; and from
time to time make or cause to be made all renewals, replacements and additions
to such
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property necessary for the conduct of its business so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times.
(c) Maintenance of Insurance. The Company and each Subsidiary thereof
shall maintain insurance (including directors and officers liability insurance)
with responsible insurance companies against such risks and in such amounts as
are customarily maintained by similar businesses or as may be required by any
Requirement of Law or any other Transaction Document, and on the Closing Date
and from time to time thereafter deliver to each Holder upon its request a
detailed list of the insurance then in effect, stating the names of the
insurance companies, the amounts and rates of the insurance, the dates of the
expiration thereof and the properties and risks covered thereby.
(d) Payment and Performance of Obligations. The Company and each
Subsidiary thereof shall (i) pay or perform all material taxes, assessments and
other governmental charges that may be levied or assessed upon it or any of its
property (including, without limitation, withholding, social security, payroll
and similar employment related taxes) on or before the dates such taxes become
delinquent, (ii) pay or perform all other material indebtedness, obligations and
liabilities in accordance with customary trade practices and (iii) comply in all
material respects with each material Contractual Obligation entered into in the
conduct of its business; provided, that any such Person may contest any item in
good faith so long as adequate reserves are maintained with respect thereto in
accordance with GAAP.
(e) Accounting Methods and Financial Records. The Company and each
Subsidiary thereof shall maintain a system of accounting, and keep such books,
records and accounts (which shall be true and complete in all material respects)
as may be required or as may be necessary to permit the preparation of financial
statements in accordance with GAAP consistently applied and in compliance with
the regulations of any Governmental Authority having jurisdiction over it or any
of its properties.
(f) Compliance With Laws and Obligations. The Company and each
Subsidiary thereof shall observe and remain in compliance with all Requirements
of Law and Contractual Obligations, including, without limitation, the Foreign
Corrupt Practices Act, in each case applicable or necessary to the conduct of
its business, except where the failure to do so could not reasonably be expected
to have a Material Adverse Effect.
(g) Use of Proceeds. The Company shall use the proceeds of the sale
of the Notes and the Warrants hereunder only to finance the Merger and
Redemptions and for general corporate purposes.
(h) Consummation of the Merger and Redemptions. On the Closing Date, the
Company and its Subsidiaries shall consummate the Post-Merger Redemptions and
each of the other transactions contemplated by the Post-Merger Redemptions
Documents and each other action recommended by the Company's or any of its
Subsidiaries' Board of Directors in connection with the Post-Merger Redemptions,
substantially in accordance with the terms of such documents, and deliver to
each Purchaser as soon as reasonably practicable after the
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Closing Date a certificate from the Company to that effect dated the Closing
Date and signed by the chief executive officer of the Company.
9.02 Other Covenants. Until the Covenant Expiration Date, the Company
hereby covenants and agrees with each Holder as follows:
(a) Visits and Inspections. The Company and each Subsidiary thereof
shall permit representatives of the Purchasers (if then a Holder) and each other
Holder that holds more than 20% of the Indebtedness represented by the Notes or
more than 20% of the then outstanding Purchased Capital Stock and Warrant
Securities (treating the Warrants as having been converted into Common Stock),
from time to time, during normal business hours, to visit and inspect its
properties; inspect, audit and make extracts from its books, records and files,
including, but not limited to, management letters prepared by independent
accountants; and discuss with its principal officers and its independent
accountants, its business, assets, liabilities, financial condition, results of
operations and business prospects, provided, that, so long as no Event of
Default or event that with the passage of time, notice or both would be an Event
of Default exists, such representatives shall conduct such activities so as to
reasonably minimize disruptions to the operations of the Company and its
Subsidiaries.
(b) Reservation of Shares. The Company shall at all times reserve and
keep available out of the aggregate of its authorized but unissued shares, free
of preemptive rights, such number of its duly authorized shares of Common Stock
as shall be sufficient to enable the Company to issue Common Stock upon the
exercise of the Warrants.
(c) Regulatory Requirements and Restrictions. In the event of any
reasonable determination by any Holder that, by reason of any existing or future
federal or state law, statute, rule, regulation, guideline, order, court or
administrative ruling, request or directive (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) (a
"Regulatory Requirement"), such Holder is effectively restricted or prohibited
from holding its Warrant, the related Warrant Securities or the Purchased
Capital Stock (including any shares of Capital Stock or other securities
distributable to such Holder in any merger, reorganization, readjustment or
other reclassification), or otherwise realize upon or receive the benefits
intended under its Warrant (a "Regulatory Constraint"), the Company shall, and
shall use its reasonable efforts to have its shareholders, take such
commercially reasonable action as such Holder may deem reasonably necessary to
permit such Holder to comply with such Regulatory Requirement. The costs of
taking such action shall be borne by the Company. Such action to be taken may
include, without limitation, the Company's authorization of one or more new
classes of Capital Stock for which such Warrant may be exercised or into which
such Purchased Stock will be converted or to make such modifications and
amendments to the Company Charter Documents, this Agreement, the related Warrant
or any other documents and instruments related to or executed in connection
herewith or with the Warrants or the Purchased Capital Stock as may be deemed
reasonably necessary by such Holder, but shall not include the redemption or
repurchase of any securities for cash until all Senior Indebtedness is paid in
full in cash and all commitments to extend credit under the Senior Credit
Agreement are terminated. Such Holder shall give written notice to the Company
of any such determination and the action or actions necessary to comply with
such Regulatory Requirement, and the Company shall take all steps reasonably
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necessary to comply with such determination as expeditiously as possible. In the
event that any Holder becomes entitled to receive securities or other property
other than Common Stock as a result of a Regulatory Constraint, the Company
shall provide notice to each other Holder of such event, and each such other
Holder shall, at its election, have the right to receive such other securities
or property upon exercise of its Warrants or conversion of its Purchased Capital
Stock in the same manner as the Holder subject to such Regulatory Constraint.
(d) Payment and Performance of Obligations. The Company and each
Subsidiary thereof shall (but subject to any grace period set forth herein or in
any other Transaction Document) pay and perform all its obligations under this
Agreement, the other Transaction Documents and the Merger and Redemptions
Documents.
(e) Environmental Matters.
(i) If any release or disposal of Hazardous Materials shall
occur or shall have occurred on any real property or any other assets or
the Company or any Subsidiary, the Company shall, or shall cause the
applicable Subsidiary to, cause the prompt containment and removal of
such Hazardous Materials and the remediation of such real property or
other assets as necessary to comply with all Environmental Laws and to
preserve the value of such real property or other assets. Without
limiting the generality of the foregoing, the Company shall, and shall
cause each Subsidiary to, comply with any valid Federal or state
judicial or administrative order requiring the performance at any real
property of the Company or any Subsidiary of activities in response to
the release or threatened release of a Hazardous Material.
(ii) To the extent that the transportation of "hazardous waste"
as defined by the Resource Conservation and Recovery Act is permitted by
this Agreement, the Company shall, and shall cause its Subsidiaries to,
dispose of such hazardous waste only at licensed disposal facilities
operating in compliance with Environmental Laws.
(f) Employee Benefit Plans. The Company shall maintain and shall
cause each of its Subsidiaries to maintain each Pension Plan in substantial
compliance with all applicable Requirements of Law.
(g) Good Standing Certificates and Certified Merger Documents. Within
15 days after the Closing Date, make all filings and take all other actions
required to obtain good standing certificates for the Company in California and
each other state in which the Company is required to be qualified to do business
and deliver copies of such certificates and a Certificate of Merger certified by
the California Secretary of State promptly upon receipt.
(h) Contracting and Engineering Licenses. The Company shall use its
best efforts to cause the contracting and engineering licenses held by Oldco,
Cupertino, Electronics or Cascade immediately before the Mergers (or
replacements for such licenses) to be transferred (or issued) to the Company as
soon as possible after the Closing Date.
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ARTICLE X
NEGATIVE COVENANTS
Until the Note Payoff and QPO Date or unless the Company has obtained
the prior written consent of the Required Holders, the Company hereby covenants
and agrees with each Holder as follows:
10.01 Limitations on Mergers; Consolidations; and Acquisitions. The
Company will not, nor will the Company permit any Subsidiary thereof to, be a
party to any merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person (or any business
unit of any other Person), except for (a) any such merger, consolidation, sale,
transfer, conveyance, lease or assignment of or by any Wholly-Owned Subsidiary
into the Company (provided that the Company shall be the surviving corporation)
or into, with or to any other Wholly-Owned Subsidiary; (b) any such purchase or
other acquisition by the Company or any Wholly-Owned Subsidiary of the assets
or stock of any Wholly-Owned Subsidiary; and (c) any Acquisition by the Company
or any Wholly-Owned Subsidiary where (1) the assets acquired (in the case of an
asset purchase) are for use, or the Person acquired (in the case of any other
Acquisition) is engaged, solely in business in which the Company is permitted
to engage under Section 10.14; (2) immediately before and after giving effect
to such Acquisition, no Event of Default or event that with passage of time,
notice or both would be an Event of Default shall exist; (3) immediately after
giving effect to such Acquisition, the Company is in pro forma compliance with
all the financial ratios and restrictions set forth in Section 10.12 (and, if
the Designated Consideration (defined below) for any such Acquisition equals or
exceeds $5,000,000, the Company shall have delivered to the Holders a
certificate demonstrating such pro forma compliance, in form and substance
satisfactory to the Holders); (4) in the case of the Acquisition of any Person,
the Board of Directors (or similar governing body) of such Person has approved
such Acquisition; (5) the Company has given the Holders notice of such
Acquisition at least 10 days prior to the consummation thereof; (6) the Holders
shall be satisfied that the Company will be in compliance with all of its
covenants under Section 10.12 on a pro forma basis for such period; and (7)
other than with respect to a single Acquisition after the Closing Date for a
Designated Consideration not in excess of $15,000,000, if the Designated
Consideration for any such Acquisition equals or exceeds $10,000,000
individually or $20,000,000 together with all other Acquisitions, the Required
Holders shall have consented thereto. When used in this Section, "Designated
Consideration" means all consideration paid by the Company and its Subsidiaries
in connection with an Acquisition (including cash and noncash purchase price,
deferred or financed purchase price, noncompetition payments and any
Indebtedness assumed or issued in connection therewith, the amount thereof to
be calculated in accordance with GAAP), including consideration paid by the
issuance of Capital Stock of the Company or any of its Subsidiaries.
10.02 [INTENTIONALLY RESERVED].
10.03 Limitations on Indebtedness. The Company will not, nor will the
Company permit any Subsidiary thereof to, create, incur, assume, or suffer to
exist, any Indebtedness, except:
(a) obligations hereunder and under the Notes;
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(b) up to $15,000,000 of subordinated notes of the Company having terms
and conditions (including tenor, covenants and subordination provisions)
identical to those governing the Notes that rank pari-passu with or subordinate
in priority to the Notes pursuant to documentation satisfactory to the Required
Holders;
(c) obligations of any Subsidiary of the Company to the Company or
another Wholly-Owned Subsidiary of the Company;
(d) obligations under the Senior Credit Documents;
(e) Indebtedness secured by Liens permitted by Section 10.08(d), and
extensions, renewals and refinancings thereof; provided that the aggregate
amount of all such Indebtedness at any time outstanding shall not exceed
$4,000,000;
(f) Permitted Hedging Obligations;
(g) Indebtedness existing on the date of this Agreement set forth on
Schedule 10.03 and any extension, renewal or refinancing thereof so long as the
principal amount thereof is not increased;
(h) up to $5,000,000 to Acquired Indebtedness assumed in Acquisitions
permitted under Section 10.01; and
(i) other Indebtedness, in addition to the Indebtedness listed above,
in an aggregate amount not at any time exceeding $1,000,000.
10.04 Limitations on Affiliate Transactions. The Company will not, nor
will the Company permit any Subsidiary thereof to, enter into or be a party to,
any transaction with any Affiliate or stockholder of the Company or Subsidiary,
except in the ordinary course of business and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and upon fair and
reasonable terms which are (i) fully disclosed to each Purchaser (if then a
Holder) and any Holder who, together with its Affiliates, holds Notes having a
principal balance of at least $2,000,000.00 and (ii) are no less favorable to
the Company or such Subsidiary than it would obtain in a comparable arm's
length transaction with a Person not an Affiliate or stockholder of the Company
or Subsidiary.
10.05 Limitations on Distributions. The Company will not, nor will the
Company permit any Subsidiary thereof, to authorize, declare or pay any
dividends or make any other distributions on its Capital Stock or purchase,
defease, redeem, or otherwise acquire or retire its Capital Stock, except for
the following:
(a) cash dividends paid by any Subsidiary to the Company or any
Wholly-Owned Subsidiary of the Company;
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(b) so long as no Event of Default or an event that with the passage of
time, notice or both would be an Event of Default exists or would result
therefrom and the Company does not expend any funds in any repurchase of its
securities therein in a greater amount than it receives in the related sale of
its equity securities, the Company may purchase its equity securities with the
net cash proceeds of a contemporaneous issuance of its equity securities;
(c) purchase of Warrant Securities and Purchased Capital Stock pursuant
to the Investor Rights Agreement;
(d) the Permitted Redemptions; and
(e) repurchases of Common Stock from employees pursuant to the terms of
the stockholders agreements listed in Schedule 10.05.
10.06 Limitations on Disposition of Assets. The Company will not, nor
will the Company permit any Subsidiary thereof to, except in the ordinary
course of its business, sell, transfer, convey or lease all or any substantial
part of its assets, or sell or assign with or without recourse any receivables,
except for Asset Sales (including the stock of its Subsidiaries) for at least
fair market value (as determined by the Board of Directors (or its equivalent)
of the Company in good faith) so long as (1) the net book value of all assets
sold or otherwise disposed of in any fiscal year does not exceed 10% of the net
book value of the consolidated assets of the Company and its Subsidiaries as of
the last day of the immediately preceding fiscal year and (2) at least 85% of
the proceeds of such Asset Sale are in cash; provided that the Company shall
not sell, transfer, convey or lease all or any substantial part of its assets
to any Subsidiary thereof.
10.07 Limitations on Investments. The Company will not, nor will the
Company permit any Subsidiary thereof to, make or have any Investment made in
cash or by delivery of property to any Person, whether by acquisition of
Capital Stock, Indebtedness or other obligation, or by loan, advance or capital
contribution, or otherwise, except the following (collectively, "Permitted
Investments"):
(a) contributions by the Company to the capital of any of its
Wholly-Owned Subsidiaries, or by any such Wholly-Owned Subsidiary to the
capital of any of its Wholly-Owned Subsidiaries;
(b) in the ordinary course of business, investments by the Company in
any Wholly-Owned Subsidiary or by any Wholly-Owned Subsidiary in the Company,
by way of intercompany loans, advances or guaranties, all to the extent
permitted by Section 10.03;
(c) Suretyship Liabilities permitted by Section 10.03;
(d) Cash Equivalent Investments;
(e) bank deposits in the ordinary course of business;
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(f) Investments in securities of account debtors received pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such account debtors;
(g) loans and advances to officers and employees by means of advances
against incentive compensation and for housing loans, hardship loans and
relocation expenses in an amount not to exceed $2,500,000 in the aggregate at
any time outstanding;
(h) Investments to consummate Acquisitions permitted by Section 10.01;
(i) Investments received in lieu of cash fees for services rendered in
an aggregate amount not to exceed $1,000,000 at any time;
(j) Investments listed on Schedule 10.07; and
(k) guarantees of Senior Indebtedness by the Company's Subsidiaries.
provided that (x) any Investment which when made complies with the requirements
of the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (b),
(c), (g), (h) or (i) shall be permitted to be made if, immediately before or
after giving effect thereto, any Event of Default or event that with the
passage of time, notice or both would constitute an Event of Default exists.
10.08 Limitations on Liens. The Company will not, nor will the Company
permit any Subsidiary thereof to, create, incur, assume or suffer to exist, any
Lien on or with respect to any of its assets or properties (including without
limitation shares of capital stock or other ownership interests of a
Subsidiary), real or personal, whether now owned or hereafter acquired, except
(collectively, "Permitted Liens"):
(a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in good
faith by appropriate proceedings and, in each case for which it maintains
adequate reserves;
(b) Liens arising in the ordinary course of business (such as (i) Liens
or carriers, warehousemen, mechanics and materialmen and other similar Liens
imposed by law and (ii) Liens incurred in connection with worker's
compensation, unemployment compensation and other types of social security
(excluding Liens arising under ERISA) or in connection with surety bonds, bids,
performance bonds and similar obligations) for sums not overdue or being
contested in good faith by appropriate proceedings and not involving any
deposits or advances or borrowed money or the deferred purchase price of
property or services and, in each case, for which it maintains adequate
reserves;
(c) Liens described on Schedule 10.08;
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(d) subject to the limitation set forth in Section 10.03(e), (i) Liens
arising in connection with Capital Leases (and attaching only to the property
being leased) and (ii) Liens that constitute purchase money security interests
on any property securing debt incurred for the purpose of financing all or any
part of the cost of acquiring such property, provided that any such Lien
attaches to such property within 60 days of the acquisition thereof and
attaches solely to the property so acquired;
(e) attachments, appeal bonds, judgments and other similar Liens, for
sums not exceeding $1,000,000 arising in connection with court proceedings,
provided the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good faith and
by appropriate proceedings;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary conduct of the business of the Company or any
Subsidiary thereof;
(g) Liens securing Senior Indebtedness (as defined in Article XII
hereof);
(h) Liens securing Acquired Indebtedness permitted by Section 10.03(h),
provided that such Liens do not extend to any assets other than the property
financed with such Acquired Debt; and
(i) the replacement, extension or renewal of any Lien permitted by
clause (c) or (h) above upon or in the same property theretofore subject
thereto arising out of the extension, renewal or replacement of the
Indebtedness secured thereby (without increased in the amount thereof).
10.09 Limitations on Tax Consolidation. The Company will not, nor will
the Company permit any Subsidiary thereof to, file or consent to the filing of
any consolidated income tax return with any Person other than the Company or
its Wholly-Owned Subsidiaries.
10.10 Limitations on Changes in Fiscal Year End. The Company will not,
nor will the Company permit any Subsidiary thereof to, change its fiscal year
end.
10.11 Limitations or Modifications of Transaction Documents, Senior
Credit Documents and Merger and Redemptions Documents.
(a) The Company will not, nor will the Company permit any Subsidiary
thereof to, amend, modify or change any Transaction Document or Merger and
Redemptions Document unless in each case such amendment, modification, change
or other action contemplated by this clause could not reasonably be considered
adverse to the interests of the Holders in any material respect.
(b) The Company will not, and will not permit any Subsidiary to,
change, amend, supplement or otherwise modify the terms of the Senior Credit
Documents, or refund, replace or refinance the same, without the prior consent
of the Required Noteholders, if such amendment,
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change, supplement or other modification or such refunding, replacement or
refinancing: (i) increase the interest rate on the Indebtedness evidenced
thereby by more than 200 basis points in excess of the interest rate that would
be applicable absent any amendment or other modification thereto after the date
hereof (provided that nothing herein shall preclude the imposition of any
default rate of interest in the amount provided in the Senior Credit Agreement
as in effect on the date hereof) or; (ii) increase the aggregate principal
amount of Indebtedness thereunder above $165,000,000 plus the amount of any
Commitment Increase (as defined in the Senior Credit Agreement) pursuant to
Section 6.5 of the Senior Credit Agreement (but in no event shall such
Commitment Increases exceed $25,000,000), as reduced by the amount of all
payments or prepayments of the term loans under, and permanent reductions to
the revolving commitments under, the Senior Credit Agreement; or (iii) extend
the date for payment of the Senior Indebtedness in full in cash beyond the
First Redemption Date or extend the date for the termination of all commitments
to extend credit under the Senior Credit Agreement beyond the First Redemption
Date. In addition, the Company will not, and will not permit any of its
Subsidiaries to, enter into any amendment, modification or change of any Senior
Credit Document unless it has given the holders of the Notes at least five
Business Days prior notice thereof.
10. 12 Financial Covenants.
(a) Fixed Charge Coverage Ratio. The Company will not permit the Fixed
Charge Coverage Ratio for any Computation Period to be less than the applicable
ratio set forth below for such Computation Period:
Computation Fixed Charge
Period Ending Coverage Ratio
------------- --------------
9/30/00 through 9/30/01 .84:1
12/31/01 through 9/30/02 .88:1
12/31/02 through 9/30/03 .92:1
12/31/03 through 9/30/04 .96:1
12/31/04 through 9/30/05 1.00:1
(b) Total Indebtedness to EBITDA Ratio. The Company will not permit the
Total Indebtedness to EBITDA Ratio as of the last day of any Computation Period
to exceed the applicable ratio set forth below for such Computation Period:
Computation Total Indebtedness
Period Ending to EBITDA Ratio
------------- ---------------
Closing Date through 6/30/02 4.4:1
9/30/02 and thereafter 4.0:1
(c) EBITDA. The Company will not permit EBITDA for any Computation
Period to be less than the sum of (i) $28,000,000 plus (ii) 50% of the EBITDA
Adjustment attributable to each Person, division or similar business unit
acquired in an Acquisition consummated during
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the period from the Closing Date through the last day of such Computation
period minus (iii) 50% of the EBITDA Adjustment attributable to each Person,
division or similar business unit disposed of during the period from the
Closing Date through the last day of such Computation Period.
(d) Net Worth. The Company will not permit the sum of (x) Net Worth
plus (y) the gross proceeds of any issuance of Indebtedness permitted by
Section 10.03(b) plus (z) $35,000,000 to be less than the sum of (i)
$14,000,000 plus (ii) 70% of cumulative Consolidated Net Income of the Company
for the period beginning on January 1, 2000 and ending on the date of
calculation (provided that if Consolidated Net Income is less than zero for any
fiscal year, or for the completed portion of the then-current fiscal year,
Consolidated Net Income for such fiscal year or portion shall be deemed to be
zero) plus (iii) 70% of the Net Cash Proceeds of any issuance of any equity
securities of the Company or any Subsidiary after the Closing Date.
(e) Capital Expenditures. The Company will not permit the aggregate
amount of all Capital Expenditures made by the Company and its Subsidiaries
during any Computation Period to exceed 1.875% of the consolidated revenues of
the Company and its Subsidiaries for such Computation Period; provided that ,
in the case of Computation Periods including Fiscal Quarters in Fiscal Year
2000, Capital Expenditures actually expended on the Company's North 7th Street
facility in San Jose, California in such fiscal quarters, in an aggregate
amount not to exceed $7,000,000 for such fiscal year, shall be disregarded for
purposes of determining compliance with this Section.
10.13 Business Activities. The Company will not engage in any line of
business other than the business engaged in on the date hereof and businesses
reasonably related thereto and the Company will not conduct any business
through a Subsidiary.
10.14 Modification of Organizational Documents. Not permit the
Certificate or Articles of Incorporation, By-laws or other organizational
documents of the Company or any Subsidiary to be amended or modified in any
way.
ARTICLE XI
REDEMPTION OF NOTES
11.01 Optional Redemption of Notes. The Company shall have the right to
redeem the Notes, in whole or in part, at any time or from time to time on a
pro rata basis in accordance with the provisions of Section 11.04, at a
redemption price equal to the unpaid principal thereof plus accrued and unpaid
interest thereon through the date fixed for redemption plus a premium (the
"Premium") based on the date of redemption equal to the following percentage of
the principal amount of the Notes redeemed:
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From and Including To and Excluding Premium Percentage
- ------------------ ---------------- ------------------
Closing Date 1st anniversary of Closing Date 5.0%
1st anniversary of Closing Date 2nd anniversary of Closing Date 4.0%
2nd anniversary of Closing Date 3rd anniversary of Closing Date 3.0%
3rd anniversary of Closing Date 4th anniversary of Closing Date 2.0%
4th anniversary of Closing Date 5th anniversary of Closing Date 1.0%
5th anniversary of Closing Date and beyond 0.0%
11.02 Mandatory Redemption of Notes.
(a) The Company shall redeem (i) fifty percent (50.0%) of the then
outstanding principal amount of the Notes on the earlier to occur (the "First
Redemption Date") of (w) the sixth anniversary of the Closing Date and (x) the
first anniversary of the date all Senior Indebtedness (as defined in Article
XII) is paid in full in cash and all commitments to extend credit under the
Senior Credit Agreement have been terminated and (ii) the balance of the Notes
on the first anniversary of the First Redemption Date (the "Final Maturity
Date"), in each case, at a redemption price equal to the unpaid principal
thereof plus accrued and unpaid interest on such redeemed principal through the
date fixed for redemption.
(b) Upon any of (i) the consummation of a Public Offering by the
Company or any of its Subsidiaries, (ii) a Change of Control, (iii) the
occurrence of an Event of Default, or (iv) the consummation by the Company of a
merger, consolidation or share exchange with any other Person (other than as
permitted by Section 10.01), or a sale of substantially all of its or any of
its Subsidiaries' assets, the Company shall, if so directed by the Required
Noteholders, redeem the Notes of all Holders in full or in part at a redemption
price equal to the unpaid principal thereof plus accrued and unpaid interest
thereon through the date fixed for redemption, plus the Premium if the
redemption is pursuant to subsection (ii), (iii) or (iv) above.
11.03 Notice of Redemption.
(a) Optional Redemption. Any call for redemption of the Notes pursuant
to Section 11.01 shall be made by giving written notice to the Holders of the
Notes to be redeemed no less than ten (10) Business Days nor more than thirty
(30) days prior to the date fixed for redemption, which notice shall specify
the principal amount of such Notes to be redeemed. If less than all the Notes
are to be redeemed, the notice of redemption shall identify the Notes and
portion thereof to be redeemed. Notice of call for redemption having been given
as aforesaid, the principal amount to be redeemed, together with accrued and
unpaid interest thereon to the date of redemption and the Premium, shall on the
date designated in such notice become due and payable. From and after such
date, unless the Company shall default in payment of such principal amount when
so due and payable, together with accrued and unpaid interest and the Premium,
interest on such principal amount shall cease to accrue.
(b) Mandatory Redemption. In the event the Company or any of its
Subsidiaries or any shareholders of the Company propose to effect any
transaction described in Section 11.02(b) (other than Section 11.02(b)(iii)),
the Company shall give each Holder written notice thereof not later than
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twenty (20) days prior to the proposed date of consummation of such
transaction. Each Holder that desires to exercise its option to cause the
Company to redeem all or part of its Notes shall give the Company irrevocable
written notice (a "Redemption Notice") of such election (including the
principal amount of its Notes to be redeemed) not later than ten (10) days
after receipt of such notice from the Company, or, in the case of a redemption
pursuant to Section 11.02(b)(iii), after knowledge of the applicable Event of
Default by such Holder. If the Company shall have received Redemption Notices
from the Required Noteholders, it shall redeem such principal amount of Notes
as set forth in the Redemption Notices. If any transaction does not occur for
any reason, the Company shall promptly notify each Holder that such redemption
shall not be made by the Company and no such redemption shall be required.
11.04 Allocation and Application of Payments. In the case of the
redemption of less than all the Notes at that time outstanding pursuant to
Section 11.01, the amount of any such redemption shall be allocated to the
aggregate principal amount of the Notes to be redeemed among the Holders of all
the Notes at the time outstanding in proportion, as nearly as practicable, to
the respective aggregate unpaid principal amounts of the Notes then held by
them.
11.05 Notation of Partial Payments. Upon any partial redemption of any
Note, such Note, at the option of the Company, shall be either (a) surrendered
to the Company in exchange for a new Note in a principal amount equal to the
principal amount remaining unpaid on the Note surrendered and otherwise having
the same terms and provisions as the Note surrendered or (b) made available to
the Company at its office herein provided for notation thereon of the portion
of the principal so redeemed.
ARTICLE XII
SUBORDINATION OF NOTES
12.01 Definitions. As used in this Article XII, the following terms
shall have the following meanings:
"Agent" means Bank of America, N.A., in its capacity as agent under the
Senior Credit Agreement, together with its successors and assigns in such
capacity.
"Cash Management Obligations" means all obligations of the Company to
any Lender (as defined in the Senior Credit Agreement) or any affiliate thereof
under or in connection with any arrangement in respect of overdraft protection,
Automated Clearing House services and other cash management services, including
reimbursement obligations relating thereto, overdraft liabilities, fees,
expenses and indemnities (including Post-Petition Interest thereon).
"Post-Petition Interest" means interest accruing in respect of Senior
Indebtedness after the commencement of any bankruptcy, insolvency, receivership
or similar proceedings by or against the Company, at the rate applicable to
such Senior Indebtedness pursuant to the terms applicable thereto, whether or
not such interest is allowed as a claim enforceable against the Company in any
such proceedings.
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"Senior Covenant Default" means any default under any Senior
Indebtedness (other than a Senior Payment Default) the occurrence of which,
with or without the giving of notice or the passage of time, entitles the
holder or holders of such Senior Indebtedness to accelerate the maturity
thereof.
"Senior Hedging Obligations" means all obligations of the Company to
any Lender (as defined in the Senior Credit Agreement) or any affiliate thereof
in respect of any interest rate swap transaction, basis swap transaction,
forward rate transaction, foreign exchange transaction, currency swap
transaction, commodity swap transaction or other similar transaction (including
Post-Petition Interest thereon).
"Senior Indebtedness" shall mean:
(i) all obligations of the Company under the Senior Credit Agreement
and all other Senior Credit Documents (including principal, premium, if any,
interest, fees, breakage costs, reimbursement obligations, indemnities and
other obligations and specifically including Post-Petition Interest thereon),
(ii) all Senior Hedging Obligations and
(iii) all Cash Management Obligations;
provided that in no event will the principal amount of all indebtedness of the
Company under the Senior Credit Agreement constitute "Senior Indebtedness"
hereunder to the extent that the aggregate principal amount of outstanding
Loans and the Stated Amount of all Letters of Credit (in each case as defined
in the Senior Credit Agreement) is in excess of $165,000,000 plus the amount of
any Commitment Increase (as defined in the Senior Credit Agreement) pursuant to
Section 6.5 of the Senior Credit Agreement (but in no event shall all such
Commitment Increases exceed $25,000,000), as reduced by the amount of all
payments or prepayments of the term loans under, and permanent reductions to
the revolving commitments under, the Senior Credit Agreement. For purposes of
the above definition of "Senior Indebtedness," all references to the Senior
Credit Agreement shall mean (unless herein otherwise provided) the Senior
Credit Agreement as in effect on the Closing Date, together with any amendments
or restatements thereof, or other agreement, that provides for any increase in
the principal amount of Senior Indebtedness within the limits set forth above
in this Section 12.01 and any amendments, restatements, refinancings,
replacements and refundings thereto that are otherwise not prohibited under
Section 10.11 hereof. The Senior Indebtedness shall be considered outstanding
whenever any commitment under the Senior Credit Agreement is outstanding.
"Senior Payment Default" means any default in the payment of any Senior
Indebtedness whether upon the scheduled maturity thereof, upon acceleration or
otherwise.
12.02 Subordination. The Company, for itself and its successors and
assigns, and each Purchaser each covenant and agree, and each Holder, by its
acceptance of any Note, shall be deemed to have agreed, that the payment from
whatever source of the obligations of the Company evidenced by this Agreement,
the Notes, and the other Transaction Documents, including principal,
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premium, if any, interest, fees, indemnities and obligations hereunder and
thereunder, excluding any obligation to issue equity securities, any
obligations to pay or reimburse expenses pursuant to Sections 15.16(a), (c),
(d) and (e) and 15.17 hereof, and any obligation to pay or reimburse expenses
pursuant to Section 6 of the Investor Rights Agreement (collectively, "Junior
Indebtedness"), shall be subordinate and subject in right of payment, to the
extent and in the manner hereinafter set forth, to the prior payment in full in
cash of all Senior Indebtedness, and that each holder of such Senior
Indebtedness, with respect to the Senior Indebtedness now existing or hereafter
arising, shall be deemed to have acquired such Senior Indebtedness in reliance
upon the covenants and provisions contained in this Article XII. The Company,
for itself and its successors and assigns, and each Purchaser each covenant and
agree, and each Holder, by its acceptance of any Note, shall be deemed to have
agreed, not to amend or otherwise modify any provision of this Article XII or
Section 15.07, 15.10, 15.11, 15.12, 15.13 or 15.14 without the prior written
consent of the Required Lenders (as defined in the Senior Credit Agreement).
The provisions of this Article XII shall continue to be effective or be
reinstated, and the Senior Indebtedness shall not be deemed to be paid in full
in cash, as the case may be, if at any time any payment of any of the Senior
Indebtedness is rescinded or must otherwise be returned by the holder thereof
upon the insolvency, bankruptcy or reorganization of the Company or otherwise,
all as though such payment had not been made.
12.03 Subordination Upon Distribution of Assets.
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any dissolution or winding-up or total or partial liquidation or reorganization
of the Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings or pursuant to any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of the Company
(including upon any event described in Section 13.01(g) or (h)), all Senior
Indebtedness shall first be paid in full in cash before any payment is made on
account of the Junior Indebtedness, and any such payment or distribution of any
cash, property or securities which otherwise would be payable or deliverable
upon or with respect to the Junior Indebtedness shall be paid or delivered
directly to the Agent or as otherwise directed by the holders of Senior
Indebtedness or a court of competent jurisdiction for application to the
payment or prepayment of the Senior Indebtedness (in such order as the holders
of Senior Indebtedness may elect) until the Senior Indebtedness shall have been
paid in full in cash.
(b) For purposes of this Section 12.03, the words "cash, property or
securities" shall not be deemed to include (i) any payment or distribution of
securities of the Company or any other corporation authorized by an order or
decree giving effect, and stating in such order or decree that effect is given,
to the subordination of the Junior Indebtedness to the Senior Indebtedness, and
made by a court of competent jurisdiction in a reorganization proceeding under
any applicable bankruptcy, insolvency or other similar law, or (ii) securities
of the Company or any other corporation provided for by a plan of
reorganization or readjustment which are subordinated, to at least the same
extent as the Junior Indebtedness as provided herein, to the payment of all
Senior Indebtedness then outstanding.
12.04 Prohibitions and Limitations on Payment.
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(a) Subject to Section 12.03 hereof, while any Senior Payment Default
exists (unless and until such Senior Payment Default shall have been cured or
waived in writing by the holders of the Senior Indebtedness), no direct or
indirect payment (in cash, property, securities or by set-off or otherwise)
shall be made on or on account of the Junior Indebtedness or in respect of any
redemption, retirement, purchase or other acquisition of the Junior
Indebtedness and the Holders shall not accept (in cash, property, securities or
by setoff or otherwise) from the Company any payment of or on account of the
Junior Indebtedness. Upon the earlier of the cure or waiver of such Senior
Payment Default, the Company shall, subject to the remaining provisions of this
Article XII, promptly pay to the Holders all sums then due and payable under
the Junior Indebtedness which were not paid to the Holders as a result of this
Section 12.04(a). The Company shall promptly give the Holders written notice of
any Senior Payment Default, but any failure to give such notice shall not
affect the subordination hereunder.
(b) Subject to Section 12.03 hereof, upon receipt by the Company of a
Blockage Notice (as defined below) in respect of any Senior Covenant Default
and until the expiration of the applicable Blockage Period (as defined below),
no direct or indirect payment (in cash, property, securities or by set-off or
otherwise) shall be made on or on account of the Junior Indebtedness or in
respect of any redemption, retirement, purchase or other acquisition of the
Junior Indebtedness and the Holders shall not accept (in cash, property,
securities or by setoff or otherwise) from the Company any payment of or on
account of the Junior Indebtedness. Upon the expiration of such Blockage
Period, the Company shall, subject to the rest of the provisions of this
Article XII hereof, promptly pay to the Holders all sums then due and payable
under the Junior Indebtedness which were not paid to the Holders as a result of
this Section 12.04(b).
(c) For purposes of this Section 12.04, a "Blockage Notice" is a notice
of a Senior Covenant Default given to the Company by the Agent and a "Blockage
Period" is the period commencing upon the Company's receipt of a Blockage
Notice and ending on the earlier of (i) the date one hundred eighty (180) days
thereafter (or such lesser period of time as may be permitted by clause (y) of
the proviso below) and (ii) the date on which such Senior Covenant Default has
been cured or waived in accordance with the terms of such Senior Indebtedness;
provided that (x) no Blockage Notice may be given by reason of the continuance
of any Senior Covenant Default which existed at the time of the giving of a
prior Blockage Notice unless such Senior Covenant Default shall have been cured
for a period of not less than thirty (30) days (it being acknowledged that any
subsequent action or any breach of any financial covenant for a period
commencing after the date of commencement of such Blockage Period that, in
either case, would give rise to a Senior Covenant Default pursuant to any
provision under which a Senior Covenant Default previously existed or was
continuing shall constitute a new event of default for this purpose), and (y)
while any number of Blockage Notices may be given in any 360 consecutive days,
the aggregate number of days during which a Blockage Period may be in effect
during any consecutive 360 day period shall not exceed 180 days. Upon receipt
of any Blockage Notice, the Company shall promptly, but in any event with five
(5) Business Days of receipt, deliver a copy of the same to each Holder.
12.05 Limitation on Remedies. So long as any Senior Indebtedness
remains outstanding, upon the occurrence and during the continuance of an Event
of Default, no Holder shall declare or join in any declaration of any of the
Junior Indebtedness to be due and payable by reason of such
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Event of Default or otherwise take or cause to be taken any action against the
Company (including, without limitation, commencing any legal action against the
Company or filing or joining in the filing of any insolvency petition against
the Company) until the expiration of the Remedy Standstill Period (as defined
below) with respect to such Event of Default; provided, that any Remedy
Standstill Period shall expire immediately and, subject to the provisions of
Sections 12.03 and 12.04 hereof, the Holders shall be entitled to exercise all
rights and remedies under Section 13.02 hereof in the event (a) such Senior
Indebtedness becomes due prior to its stated maturity (provided, that if any
such acceleration of the Senior Indebtedness is rescinded by the holders of
such Senior Indebtedness, the Holders agree promptly to rescind any
acceleration of the Junior Indebtedness then in effect due solely to the
acceleration of such Senior Indebtedness), (b) an Event of Default pursuant to
Section 13.01(g) or (h) shall have occurred and be continuing, or (c) any
holder of the Senior Indebtedness commences any action to foreclose upon,
attach, seize, take control of or otherwise exercise remedies under any
agreement governing such Senior Indebtedness or any security therefor, in each
case, on or with respect to a material portion of the assets of the Company.
For the purposes of this Section 12.05, a "Remedy Standstill Period" with
respect to any Event of Default is the period commencing on the date a written
notice of intention to exercise remedies on account of the occurrence of such
Event of Default shall have been given by the Required Noteholders to the
Company and the Agent and expiring on the later of (i) 45 days after the date
of such notice and (ii) the expiration of any Blockage Period in effect on the
last day of such 45 day period.
12.06 Payments and Distributions Received. If any Holder shall have
received any payment from, or distribution of assets of, the Company in respect
of any of the Junior Indebtedness in contravention of the terms of this Article
XII, then and in such event such payment or distribution shall be received and
held in trust for and shall be paid over or delivered, in the form received
(except for the endorsement or assignment of such Holder where necessary), to
the holders of the Senior Indebtedness (or to the applicable agent on their
behalf) for application to the Senior Indebtedness, to the extent necessary to
pay all such Senior Indebtedness in full in cash.
12.07 Proofs of Claim. If, while any Senior Indebtedness is
outstanding, any event described in Section 12.03(a) occurs, the Holders shall
duly and promptly take such action as any holder of the Senior Indebtedness may
reasonably request to collect any payment with respect to the Junior
Indebtedness for the account of the holders of the Senior Indebtedness and to
file appropriate claims or proofs of claim in respect of the Junior
Indebtedness and to execute and deliver on demand such powers of attorney,
proofs of claim, assignments of claim or other instruments as may be required
to enforce any and all claims on or with respect to the Junior Indebtedness.
The Agent is hereby authorized to (i) file an appropriate claim for an on
behalf of the Holders if they, or any of them, do not file, and there is not
otherwise filed on behalf of the Holders, a proper claim or proof of claim or
proof of claim in the form required in any proceeding prior to 10 days before
the expiration of the time to file such claim or claims and (ii) file an
appropriate ballot for and on behalf of the Holders if they, or any of them, do
not file, and there is not otherwise filed on behalf of the Holders, a proper
ballot in the form required prior to 2 days before the expiration of the time
to file such ballot.
12.08 Subrogation. After all amounts payable under or in respect of the
Senior Indebtedness have been paid in full in cash, the Holders shall be
subrogated to the rights of the
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holders of the Senior Indebtedness to receive payments or distributions
applicable to the Senior Indebtedness to the extent that distributions
otherwise payable to the Holders have been applied to the payment of the Senior
Indebtedness. A distribution made under this Article XII to a holder of the
Senior Indebtedness which otherwise would have been made to a Holder is not, as
between the Company and such Holder, a payment by the Company on the Senior
Indebtedness.
12.09 Relative Rights. This Article XII defines the relative rights of
the Holders and the holders of the Senior Indebtedness. Nothing in this Article
XII shall (a) impair, as between the Company and the Holders, the obligations
of the Company, which are absolute and unconditional, to pay principal of and
interest (including default interest) on the Notes in accordance with their
terms, (b) affect the relative rights of the Holders and creditors of the
Company other than holders of the Senior Indebtedness, or (c) prevent the
Holders from exercising their available remedies upon a default or Event of
Default, subject to the rights, if any, under this Article XII of holders of
the Senior Indebtedness.
12.10 Subordination Not Impaired; Benefit of Subordination. Each of the
Holders agrees and consents that without notice to or assent by such Holder,
and without affecting the liabilities and obligations of the Company and any
holder of the Notes and the rights and benefits of the holders of the Senior
Indebtedness set forth in this Article XII, the holders of the Senior
Indebtedness, and any representative or representatives acting on behalf
thereof, may exercise or refrain from exercising any right, remedy or power
granted by or in connection with any agreements relating to the Senior
Indebtedness and the subordination provisions hereof, including, without
limitation, accelerating the Senior Indebtedness or exercising any right of
set-off as the holders of the Senior Indebtedness, and any representative or
representatives acting on their behalf, may deem advisable, and all without
impairing, abridging, diminishing, releasing or affecting the subordination of
the Junior Indebtedness to the Senior Indebtedness provided for herein. Without
limiting the generality of the foregoing, the holders of Senior Indebtedness
may, from time to time, in their sole discretion and without notice to any
Holder, take any or all of the following actions without affecting the
obligations of any Holder hereunder: (a) retain or obtain the primary or
secondary obligation of any other obligor or obligors with respect to any of
the Senior Indebtedness; (b) release or compromise any obligation of any nature
of any obligor with respect to any of the Senior Indebtedness; and (c) release
its security interest in, or surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the Senior
Indebtedness, or extend or renew for one or more periods (whether or not longer
than the original period) or release, compromise, alter or exchange any
obligation of any nature of any obligor with respect to any such property. Each
Holder hereby waives (i) notice of acceptance of the Agreement by any holder of
Senior Indebtedness, (ii) notice of the existence or creation or non-payment of
all or any Senior Indebtedness and (iii) all diligence in collection or
protection of or realization upon the Senior Indebtedness or any security
therefor.
12.11 Miscellaneous.
(a) To the extent permitted by applicable law, the Holders and the
Company hereby waive notice of acceptance hereof and reliance hereon by the
holders of the Senior Indebtedness.
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(b) The Company and the Holders hereby expressly agree that the holders
of the Senior Indebtedness may enforce any and all rights derived herein by
suit, either in equity or law, for specific performance of any agreement
contained in this Article XII or for judgment at law and any other relief
whatsoever appropriate to such action or procedure.
(c) The failure of the Company to make any payment with respect to the
Notes by reason of the operation of this Article XII shall not be construed as
preventing the occurrence of an Event of Default hereunder. Immediately upon
the expiration of any period under this Article XII during which no payment may
be made on account of the Notes, the Company may resume making any and all
payments on account of the Notes (including any payment of principal, interest,
Premium or any other amount missed during such period), which payment (if so
made in full) shall be deemed to have cured, and the Holders shall be deemed to
have waived, any default or Event of Default which may arise on account of any
such missed payment.
(d) Nothing contained in this Article XII shall prevent the Company, at
any time except during the pendency of any event described in Section 12.03(a)
or under the conditions described in Section 12.04, from making payments on the
Junior Indebtedness.
(e) Upon any payment or distribution of assets of the Company referred
to in this Article XII, the Holders shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Holders for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of Senior
Indebtedness or other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article XII; provided that the
foregoing shall only apply if such court, receiver, trustee in bankruptcy,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person has been apprised of the provisions of this Article XII and states
in such order, decree or certificate that effect has been given to this
Agreement.
(f) Each Holder acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of the Senior Indebtedness, whether such Senior
Indebtedness was created or acquired before or after the date of this
Agreement, and each holder of the Senior Indebtedness shall be deemed
conclusively to have relied upon such subordination provisions in acquiring and
continuing to hold such Senior Indebtedness.
(g) No Holder shall hereafter give any further subordination to any
other creditor in respect of the Notes.
12.12 Assignment of Notes. Each of the Holders agrees to notify the
Agent (as defined in the Senior Credit Agreement) in writing upon the
consummation of each assignment of the Junior Indebtedness (and to the extent
notified to the Company, each participation of the Notes), specifying
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the identity of the assignee or the Participant and the principal terms of such
assignment or participation.
12.13 Legend. Each Note and each other instrument or document
evidencing the Junior Indebtedness or any portion thereof shall bear a legend
in form and substance satisfactory to the Agent conspicuously indicating that
payment of the Junior Indebtedness is subordinated to the Senior Indebtedness
pursuant to the terms hereof.
ARTICLE XIII
EVENTS OF DEFAULT
13.01 Events of Default. An "Event of Default" shall occur hereunder
if:
(a) the Company shall default in the payment of the principal of, or
any Premium on, the Notes, when and as the same shall become due and payable,
whether at maturity or at a date fixed for prepayment or by acceleration or
otherwise; or
(b) the Company shall default in the payment of any installment of
interest on the Notes according to its terms, when and as the same shall become
due and payable and such default shall continue unremedied for a period of five
days; or
(c) the Company shall default in the due observance or performance of
any covenant, condition or agreement contained in Articles X or XI of this
Agreement; or
(d) (i) the Company shall default in the due observance or performance
of any covenant, condition or agreement contained in Section 9.02(b), and such
default is not remedied or waived within 10 days after receipt by the Company
of written notice from the Required Holders of such default or (ii) the Company
shall default in the due observance or performance of any covenant, condition
or agreement contained herein or in the Notes (other than those referred to in
clauses (a), (b), (c) or (d)(i) of this Section 13.01 and, to the extent it
relates to a breach of a covenant with respect to Senior Indebtedness (as
defined in Article XII), Section 9.01(d)), and such default is not remedied or
waived within 30 days after receipt by the Company of written notice from the
Required Noteholders of such default; or
(e) any representation, warranty, certification or statement made by or
on behalf of the Company herein, in any Note, or in any certificate or other
document delivered by the Company to the Holders pursuant hereto or thereto
shall have been incorrect in any material respect when made; or
(f) (i) the Company or any Subsidiary thereof shall default (as
principal or guarantor), after the expiration of any period of grace related
thereto, in the payment of any principal or interest (or similar payment in the
case of Capital Leases) or in the due observance or performance of any
covenant, condition or agreement contained in the terms of any Indebtedness of
the Company or any of its Subsidiaries (other than the Notes and the Senior
Indebtedness (as defined in Article XII hereof)) and such Indebtedness is in an
amount, individually or in the aggregate, in excess of
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$1,000,000, (ii) the Company or any Subsidiary thereof shall default (as
principal or guarantor) in the payment of any principal of or interest on any
Senior Indebtedness (as defined in Article XII) if the aggregate amount of all
such payments not made when due is $1,000,000 or more, or (iii) any
Indebtedness of the Company or any of its Subsidiaries, which individually or
in the aggregate is in excess of $1,000,000 shall become (whether automatically
or by demand of the lender thereof) due and payable in advance of the stated
maturity thereof by virtue of any acceleration or similar provision relating
thereto; or
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Company or any Subsidiary thereof or of a substantial part of
its respective property or assets, under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or a similar official for the
Company or any Subsidiary thereof or for a substantial part of its respective
property or assets, or (iii) the winding up or liquidation of the Company or
any Subsidiary thereof; and such proceeding or petition shall continue
undismissed for sixty (60) days, or an order or decree approving or ordering
any of the foregoing shall be entered; or
(h) the Company or any Subsidiary thereof shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding for the filing of any petition described in paragraph
(g) of this Section 13.01, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Company or Subsidiary, or for a substantial part of its property or assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due or (vii) take any action for
the purpose of effecting the foregoing; or
(i) one or more judgments, writs of attachment or similar process
(collectively, "Judgments") shall be entered against the Company or any of its
Subsidiaries involving a liability of $1,000,000 or more in the aggregate for
all such Judgments for the Company and its Subsidiaries and shall not have been
vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof.
(j) Other Material Obligations. Default in the payment when due, or in
the performance or observance of, any material obligations of, or condition
agreed to by, the Company or any Subsidiary thereof with respect to any
material purchase or lease of goods or services where such default, singly or
in the aggregate with all other such defaults, might reasonably be expected to
have a Material Adverse Effect.
(k) Pension Plan. Institution of any steps by the Company or any other
Person to terminate a Pension Plan if as a result of such termination the
Company could be required to make a contribution to such Pension Plan, or could
incur a liability or obligation to such Pension Plan in
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excess of $1,000,000; (ii) a contribution failure occurs with respect to any
Pension Plan sufficient to give right to a lien under Section 302(f) of ERISA;
or (iii) there shall occur any withdrawal or partial withdrawal from a
Multiemployer Pension Plan and the withdrawal liability (without unaccrued
interest) to Multiemployer Pension Plans as a result of such withdrawal
(including any outstanding withdrawal liability that the Company and the
Controlled Group have incurred on the date of such withdrawal) exceeds
$1,000,000.
(l) Conduct of Business. The Company or any Subsidiary thereof
voluntarily suspends transaction of its business or is enjoined, restrained or
in any way prevented by court order or decree from conducting any material part
of its business.
(m) Bonding Arrangements. The Company or any Subsidiary thereof
breaches or defaults with respect to the terms of one or more bonded contracts
if the effect of such breach or default is to cause one or more Persons issuing
bonds for the Company or any Subsidiary thereof to take possession of the work
under contracts which are subject to bonds aggregating $1,000,000 or more with
respect to unfinished work.
13.02 Acceleration. If an Event of Default occurs under Section
13.01(g) or 13.01(h), then the outstanding principal of and accrued and unpaid
interest and the Premium on the Notes and all obligations under this Agreement
shall automatically become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are expressly waived. If
any other Event of Default occurs and is continuing, the Required Noteholders,
by written notice to the Company, may (subject to the terms and conditions of
Article XII hereof) declare the principal of and accrued and unpaid interest
and the Premium on the Notes and all obligations under this Agreement to be due
and payable immediately. Upon any such declaration of acceleration, such
principal, interest, Premium and other obligations shall become immediately due
and payable and subject to the terms and conditions of Article XII hereof, each
Holder shall be entitled to exercise all of its rights and remedies hereunder
and under its Note whether at law or in equity.
13.03 Set-Off. Upon the occurrence and during the continuance of an
Event of Default, in addition to all other rights and remedies that may then be
available to any Holder, each Holder is hereby authorized at any time and from
time to time, without notice to the Company (any such notice being expressly
waived by the Company), subject to Article XII hereof, to set off and apply any
and all indebtedness at any time owing by such Holder to or for the credit or
the account of the Company against all amounts which may be owed to such Holder
by the Company in connection with this Agreement or any Notes. If any Holder
shall obtain from the Company payment of any principal of or interest or
Premium on any Note or payment of any other amount under this Agreement or any
Note held by it or any other Transaction Document through the exercise of any
right of set-off, and, as a result of such payment, such Holder shall have
received a greater percentage of the principal, interest, Premium or other
amounts then due hereunder by the Company to such Holder than the percentage
received by any other Holders, it shall promptly make such adjustments with
such other Holders from time to time as shall be equitable, to the end that all
the Holders shall share the benefit of such excess payment (net of any expenses
which may be incurred by such Holder in obtaining or preserving such excess
payment) pro rata in accordance with the unpaid principal and/or interest
and/or Premium on the
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Notes or other amounts (as the case may be) owing to each of the Holders. To
such end all the Holders shall make appropriate adjustments among themselves if
such payment is rescinded or must otherwise be restored. Any Holder taking
action under this Section 13.03 shall promptly provide written notice to the
Company of any such action taken; provided, that the failure of such Holder to
provide such notice shall not necessarily prejudice its rights hereunder.
ARTICLE XIV
INDEMNIFICATION
14.01 Indemnification.
(a) By the Company. In addition to all other sums due hereunder or
provided for in this Agreement, the Company shall indemnify and hold harmless
each Holder and its Affiliates and its officers, directors, agents, employees,
subsidiaries, partners and controlling persons (each, an "Indemnified Party")
to the fullest extent permitted by law, from and against any and all losses,
claims, damages, expenses (including reasonable fees, disbursements and other
charges of counsel) or other liabilities (collectively, "Losses") resulting
from or arising out of, directly or indirectly, (i) any breach of any
representation or warranty concerning the Company, Oldco or any of their
Subsidiaries in the Agreement or any other Transaction Document or any
third-party allegation that if true would constitute a breach of any such
representation or warranty or (ii) any breach of any covenant or agreement of
the Company in any Transaction Document, including without limitation, in each
case, any legal, administrative or other actions (including actions brought by
any Holder or the Company or any equity holders of the Company or derivative
actions brought by any Person claiming through or in the Company's name),
proceedings or investigations (whether formal or informal), based upon,
relating to or arising out of the Transaction Documents or the transactions
contemplated thereby, or any Indemnified Party's role therein or in the
transactions contemplated thereby; provided, that if and to the extent that
such indemnification is unenforceable for any reason, the Company shall make
the maximum contribution to the payment and satisfaction of such Losses which
shall be permissible under applicable laws. In connection with the obligation
of the Company to indemnify for expenses as set forth above, the Company
further agrees, upon presentation of appropriate invoices containing reasonable
detail, to reimburse each Indemnified Party for all such expenses (including
reasonable fees, disbursements and other charges of counsel) as they are
incurred by such Indemnified Party. Notwithstanding the foregoing, unless it
relates to a breach of any representation or warranty contained in the first
sentence of Section 6.02(a) or in Section 6.01, 6.04, 6.13 or 6.26, the Company
will have no liability with respect to the matters described in clause (i) of
this Section 14.01(a) except (x) to the extent the total of all Losses with
respect to such matters exceeds $660,000 and (y) with respect to claims for
indemnification that are made or asserted on or before the first anniversary of
the Closing Date (or, to the extent Article XII prohibits making such claim by
the first anniversary of the Closing Date, within 30 days of the expiration of
such prohibition; provided that written notice of the intention to assert any
such claim and the details thereof is delivered to the Company on or before the
first anniversary of Closing Date). The Company's maximum liability with
respect to the matters described in clause (i) of this Section 14.01(a) will be
limited to $20,000,000, except with respect to a breach of any representation
or warranty contained in the first sentence of Section 6.02(a) or in Section
6.01, 6.04, 6.13 or 6.26, in which case there shall be no limit hereunder as to
the Company's
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maximum liability, no threshold as to the Company's liability hereunder and no
limit as to the time within which a claim must be asserted or made for
indemnification hereunder.
(b) By the Selling Shareholders with respect to the Company. In
addition to all other sums due hereunder or provided for in this Agreement and
as an inducement to the Purchasers to enter into this Agreement and to
consummate the transactions contemplated hereunder, the Selling Shareholders
shall indemnify and hold harmless each Indemnified Party to the fullest extent
permitted by law, from and against any and all Losses resulting from or arising
out of, directly or indirectly, any breach of any representation or warranty in
Article VI or any third-party allegation that if true would constitute a breach
of any such representation or warranty; provided, that if and to the extent
that such indemnification is unenforceable for any reason with respect to a
Selling Shareholder, such Selling Shareholder shall make the maximum
contribution to the payment and satisfaction of its indemnification obligation
with respect to such Losses which shall be permissible under applicable laws.
In connection with the obligation of the Selling Shareholders to indemnify for
expenses as set forth above, the Selling Shareholders further agree, upon
presentation of appropriate invoices containing reasonable detail, to reimburse
each Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
Indemnified Party. Notwithstanding the foregoing, unless it relates to a breach
of any representation or warranty contained in the first sentence of Section
6.02(a) or in Section 6.01, 6.04, 6.13 or 6.26, the Selling Shareholders will
have no liability with respect to the matters described in this Section
14.01(b) except (x) to the extent the total of all Losses with respect to such
matters exceeds $1,320,000 and (y) with respect to claims for indemnification
that are made or asserted on or before the first anniversary of the Closing
Date. The indemnification obligation of each Selling Shareholder shall be
several with respect to the obligation of each other Selling Shareholder, with
each Selling Shareholder being liable to pay a percentage of each Loss payable
under this Section 14.01(b) equal to the percentage set forth opposite such
Selling Shareholder's name in Schedule 14.01. The Selling Shareholders' maximum
aggregate liability with respect to the matters described in this Section
14.01(b) will be limited to $5,000,000, with the maximum several liability of
each Selling Shareholder being limited to $5,000,000 multiplied by the
percentage set forth opposite such Selling Shareholder's name in Schedule 14.01
except with respect to a breach of any representation or warranty contained in
the first sentence of Section 6.02(a) or in Section 6.01, 6.04, 6.13 or 6.26,
in which case there shall be no limit hereunder as to the Selling Shareholder's
maximum liability, no threshold as to the Selling Shareholder's liability
hereunder and no limit as to the time within which a claim must be asserted or
made for indemnification hereunder. The maximum several liability of a Selling
Shareholder under this Section 14.01(b) shall be subject to reduction pursuant
to Section 14.01(c). The liability of the Company under Section 14.01(a) shall
be joint and several with the liability of the Selling Shareholders under this
Section 14.01(b).
(c) Alternative Selling Shareholder Indemnity Payment. In the event of
any Loss for which the Selling Shareholders have an indemnification obligation
under Section 14.01(b), at the election in writing by the Required Equity
Holders in their sole discretion, each Selling Shareholder shall, in lieu of
paying its indemnification obligation under Section 14.01(b), pay to the
Company an amount equal to the amount that such Selling Shareholder would
otherwise be required to pay under Section 14.01(b) multiplied by three. In the
event of payment under this
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Section 14.01(c) a Selling Shareholder's maximum several indemnification
obligation under Section 14.01(b) shall be reduced by an amount equal to half
the amount such Selling Shareholder pays under this Section 14.01(c) unless
such payment relates to a breach of any representation or warranty contained in
the first sentence of Section 6.02(a) or in Section 6.01, 6.04, 6.13 or 6.26.
For example, if a Selling Shareholder paid $2,000,000 under this Section
14.01(c), his or her maximum obligation under Section 14.01(b) shall be reduced
by $1,000,000. The Selling Shareholders' maximum aggregate liability under this
Section 14.01(c) shall be limited to $10,000,000, with each Selling
Shareholder's maximum several liability under this Section 14.01(c) being
limited to $10,000,000 multiplied by the percentage set forth opposite such
Selling Shareholder's name in Schedule 14.01 except with respect to a breach of
any representation or warranty contained in the first sentence of Section
6.01(a) or in Section 6.01, 6.04, 6.13 or 6.26, in which case there shall be no
limit hereunder as to the Company's maximum liability, no threshold as to the
Company's liability hereunder and no limit as to the time within which a claim
must be asserted or made for indemnification hereunder. The foregoing maximum
several liability for a Selling Shareholder shall be reduced for each payment
made by such Selling Shareholder under Section 14.01(b) by a sum equal to twice
the amount actually paid by the Selling Shareholder under Section 14.01(b)
unless such payment relates to a breach of any representation or warranty
contained in the first sentence of Section 6.02(a) or in Section 6.01, 6.04,
6.13 or 6.26. For example, if a Selling Shareholder paid $1,000,000 under
Section 14.01(b), his or her maximum obligation under this Section 14.01(c)
shall be reduced by $2,000,000.
(d) By the Selling Shareholders. In addition to all other sums due
hereunder or provided for in this Agreement, each Selling Shareholder shall
severally indemnify and hold harmless each Indemnified Party to the fullest
extent permitted by law, from and against any and all Losses resulting from or
arising out of, directly or indirectly, any breach of any representation or
warranty concerning such Person or his Purchased Capital Stock in Article V of
this Agreement or any covenant or agreement of such Person in this Agreement or
any third-party allegation that if true would constitute a breach of any such
representation or warranty, including without limitation any legal,
administrative or other actions (including actions brought by any Holder or the
Company or any equity holders of the Company or derivative actions brought by
any Person claiming through or in the Company's name), proceedings or
investigations (whether formal or informal), based upon, relating to or arising
out of such matters, or any Indemnified Party's role therein; provided, that if
and to the extent that such indemnification is unenforceable for any reason,
such Selling Shareholder shall make the maximum contribution to the payment and
satisfaction of such Losses which shall be permissible under applicable laws.
In connection with the obligation of each Selling Shareholder to indemnify for
expenses as set forth above, such Selling Shareholder further agrees, upon
presentation of appropriate invoices containing reasonable detail, to reimburse
each Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
Indemnified Party. Each Selling Shareholder's maximum aggregate liability with
respect to the matters described in this Section 14.01(d) will be limited to
the aggregate purchase price he received for his shares of Purchased Capital
Stock.
(e) Certain Selling Shareholders. In addition to all other sums due
hereunder or provided for in this Agreement, the Company and the Selling
Shareholders other than
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the Ravizza Children's Trust II and the Ravizza Children's Trust III shall,
jointly and severally, indemnify and hold harmless each Indemnified Party to
the fullest extent permitted by law, from and against any and all Losses
resulting from or arising out of any claim made by Richard L. Collins, his
heirs, representatives and assigns in any way relating to or arising out of any
of the transactions pursuant to which Richard L. Collins this year sold his
shares of common stock in Oldco or the transactions contemplated by the
Transaction Documents against the Company, Oldco and their Subsidiaries, the
Indemnified Parties, and/or the shareholders, creditors, officers, directors
and employees of the Company, Oldco and their Subsidiaries, including without
limitation, in each case, any legal, administrative or other actions (including
actions brought by any Holder or the Company or any equity holders of the
Company or derivative actions brought by any Person claiming through or in the
Company's name), proceedings or investigations (whether formal or informal),
based upon, relating to or arising out such matter, or any Indemnified Party's
role therein; provided, that if and to the extent that such indemnification is
unenforceable for any reason, the Company and the Selling Shareholders shall
make the maximum contribution to the payment and satisfaction of such Losses
which shall be permissible under applicable laws. In connection with the
obligation of the Company and the Selling Shareholders to indemnify for
expenses as set forth above, the Company and the Selling Shareholders further
agree, upon presentation of appropriate invoices containing reasonable detail,
to reimburse each Indemnified Party for all such expenses (including reasonable
fees, disbursements and other charges of counsel) as they are incurred by such
Indemnified Party.
(f) Other Indemnification Obligations.
(i) Without limitation of any other provision of this Agreement,
the Company agrees to defend, indemnify and hold each Indemnified Party
harmless from and against any and all Losses based upon, arising out of, by
reason of or otherwise in respect of or in connection with any third party
claims relating in any way to such Indemnified Party's status as a security
holder, creditor, director, agent, representative or controlling person of the
Company or otherwise relating to such Indemnified Party's involvement with the
Company (including, without limitation, any and all Losses under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, which relate directly or indirectly to the
registration, purchase, sale or ownership of any securities of the Company or
to any fiduciary obligation owed with respect thereto), including, without
limitation, in connection with any third party action or claim relating to any
action taken or omitted to be taken or alleged to have been taken or omitted to
have been taken by any Indemnified Party as security holder, director, agent,
representative or controlling person of the Company or otherwise, alleging
so-called control person liability or securities law liability; provided,
however, that the Company will not be liable to the extent that such Losses
arise from and are based on (A) an untrue statement or omission or alleged
untrue statement or omission in a registration statement or prospectus which is
made in reliance on and in conformity with written information furnished to the
Company by or on behalf of such Indemnified Party, or (B) conduct by an
Indemnified Party which constitutes gross negligence, fraud, willful misconduct
or malfeasance, or (C) the Indemnified Party's failure to qualify as an
"accredited investor" under Rule 501 of the Securities Act, or (D) the breach
by the Indemnified Party or its Affiliate of any obligation under this
Agreement or under applicable law. In connection with the obligation of the
Company to indemnify for expenses as set forth above, the Company further
agrees, upon presentation of
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appropriate invoices containing reasonable detail, to reimburse each
Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
Indemnified Party.
(ii) If the indemnification provided for in Section 14.01(f)(i)
above for any reason is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party in respect of any Losses referred to
therein, then the Company, in lieu of indemnifying such Indemnified Party
thereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such Losses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Indemnified
Parties, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Indemnified Parties in connection with
the action or inaction which resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault of the Company and the
Indemnified Parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Indemnified Parties and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(iii) Each of the Company and the Purchasers agrees that it
would not be just and equitable if contribution pursuant to Section
14.01(f)(ii) above were determined by pro rata or per capita allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding subsection.
(iv) The Company's liability under this Section 14.01(f) with
respect to Losses that arise out of or relate to an event that occurs after the
closing of a Qualified Public Offering shall be limited to expenses only
(including reasonable fees, disbursements and other charges of counsel) of the
Indemnified Parties, with the Indemnified Parties each being entitled hereunder
to retain their own counsel.
14.02 Claims against the Company and its Subsidiaries. Following the
Closing, none of the Selling Shareholders shall assert any claim against the
Company or any of its Subsidiaries, whether for indemnification, contribution,
subordination, subrogation or otherwise, that relates to the obligations under
this Agreement of the Selling Shareholders, including Article XIV and in
respect of any indemnification payments made by a Selling Shareholder with
respect to a matter by which the Company or any of its Subsidiaries may be
liable jointly with such shareholder.
14.03 Set-Off. Each Indemnified Party may, in its sole discretion, set
off any amount to which it may be entitled under this Article XIV against
amounts otherwise payable to the Company or the Selling Shareholders.
14.04 Interest. All sums payable under this Article XIV shall bear
interest at the rate of 9% per annum, compounded annually, from the date of
such Loss until paid in full.
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14.05 Other Indemnification Matters. Each Indemnified Party's right to
indemnification will not be affected by any knowledge acquired (or capable of
being acquired) at any time, whether before or after the date of this Agreement
or the Closing Date, with respect to any representation, warranty, covenant or
obligation in this Agreement, the Notes, any Warrant or any other Transaction
Document. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment
of damages, or other remedy based on such representations, warranties,
covenants and obligations. Each Selling Shareholder's indemnification
obligations under Section 14.01(d) shall be limited to Losses with respect to
the Purchased Capital Stock, including the ownership thereof. Nothing in this
Article XIV is intended to limit any party's right to recover with respect to
any action for fraud.
EXCEPT TO THE EXTENT OTHERWISE PROVIDED IN THIS AGREEMENT OR PROHIBITED BY
APPLICABLE LAW, NOTHING IN THE FOREGOING INDEMNITIES IS INTENDED TO PRECLUDE
THE COMPANY AND/OR THE SELLING SHAREHOLDERS, AS APPLICABLE, FROM BEING LIABLE
FOR THE INDEMNITY OF LOSSES THAT RESULT FROM THE SOLE, CONCURRENT, CONTRIBUTORY
OR COMPARATIVE NEGLIGENCE OR GROSS NEGLIGENCE OR THE SOLE OR CONCURRENT STRICT
LIABILITY OF ANY INDEMNIFIED PARTY.
ARTICLE XV
MISCELLANEOUS
15.01 Survival of Representations and Warranties and Covenants. Subject
to the time limits for asserting certain claims specified in Article XIV, the
representations and warranties of the Company set forth in this Agreement shall
survive indefinitely, regardless of acceptance of the Notes, the Warrants, and
the Purchased Capital Stock and payment therefor. The covenants of the Company
and the Selling Shareholders set forth in this Agreement shall survive
indefinitely unless otherwise specifically provided in this Agreement.
15.02 Notices. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto, to be effective, shall be in
writing and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered immediately by hand, if personally
delivered; when delivered by courier, if delivered by commercial overnight
courier service; five Business Days after being deposited in the mail, postage
prepaid, if mailed; and when receipt is acknowledged, if telecopied, in each
such case if addressed as follows:
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(a) if to the Company:
1132 North Seventh Street
San Jose, CA 95112
Attention: Chief Financial Officer
Telecopy: (408) 275-6987
with a required copy to:
Jeffrey P. Newman, Esq.
Farella, Braun & Martel, LLP
235 Montgomery Street, 30th Floor
San Francisco, CA 94101
Telecopy: (415) 954-4480
(b) if to any Selling Shareholder:
c/o Cupertino Electric, Inc.
1132 North Seventh Street
San Jose, CA 95112
Attention: Chief Financial Officer
Telecopy: (408) 275-6987
(c) if to the BancAmerica:
BancAmerica Capital Investors SBIC I, L.P.
100 N. Tryon Street, Suite 2500
Charlotte, NC 28255
Attention: Ann B. Hayes
Telecopy: (704) 386-6432
(d) if to TA:
TA/Advent VIII L.P.
TA/Atlantic and Pacific IV L.P.
TA Executives Fund LLC
TA Investors LLC
TA Subordinated Debt Fund, L.P.
c/o TA Associates, Inc.
125 High Street, Suite 2500
Boston, MA 02110
Attention: Roger Kafker
Telecopy: (617) 574-6728
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GPH CE Partners
c/o Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attention: John R. LeClaire, P.C.
Telecopy: (617) 523-1231
(e) if to any other Holder:
At the address designated by such Holder and shown on the Note Register or the
Company's stock register.
15.03 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Company under this
Agreement, the Notes and each Warrant shall be made in U.S. Dollars, in
immediately available funds, without deduction, set-off or counterclaim, to the
payee thereof not later than 2:00 p.m. Charlotte time on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day). Each
such payment shall be made in accordance with written payment instructions
furnished by such payee from time to time. If the due date of any payment under
this Agreement or any Note would otherwise fall on a day which is not a
Business Day, such date shall be extended to the next succeeding Business Day
and interest shall be payable for any principal so extended for the period of
such extension.
(b) Except as otherwise provided in this Agreement, each payment or
prepayment of principal in respect of the Notes shall be made and applied pro
rata, as nearly as may be, to all outstanding Notes according to the respective
unpaid principal amounts thereof, and each payment of interest in respect of
the Notes shall be made and applied pro rata, as nearly as may be, to all
outstanding Notes according to the respective amounts of such interest then due
and payable.
(c) Neither the Company, nor any of its Affiliates shall, directly or
indirectly, acquire any Note, by purchase or otherwise, except by way of
payment or prepayment thereof in accordance with the provisions of the Notes
and of this Agreement (including, without limitation, the provisions of this
Agreement requiring the payment and application of all such payments or
prepayments pro rata to all outstanding Notes).
15.04 Assignments and Participation.
(a) The Company may not assign its rights or obligations hereunder or
under any other Transaction Document (except the Notes and the Warrants)
without the prior consent of the Required Holders or under the Notes without
the prior consent of the Required Noteholders. The Company may not assign its
rights or obligations under a Warrant except in accordance with the terms of
such Warrant. The Selling Shareholders may not assign their rights and
obligations hereunder or under any other Transaction Document without the prior
consent of the Required Equity Holders.
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(b) (i) Each Holder may assign to one or more of its Affiliates or
other third parties (except competitors or direct or indirect non-financial
institution customers of the Company) all or a portion of its interests, rights
and obligations under this Agreement and the Notes; provided, that unless the
assignee is a Holder or an Affiliate of the transferring Holder, the principal
amount of the Notes being assigned must equal or exceed $1,000,000 or represent
100% of the principal amount of such Holder's Note. The Company will keep at
its principal executive office or at such other office as the Company may
designate in writing to the Holders a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, but at its expense
(other than transfer taxes, if any), it will provide for the registration and
transfer of Notes. Upon registration and transfer of any Note in compliance
herewith, the assignee thereof shall become the Holder thereof (or such portion
thereof as shall have been transferred and registered to such assignee) for
purposes of this Agreement and the other Transaction Documents and shall
thereupon, in respect of such Note (or portion thereof) be entitled to the
benefits and liable for the obligations of a Holder hereunder.
(ii) Whenever any Note shall be surrendered for transfer or
exchange in compliance herewith either at such office of the Company or at the
place of payment named in such Note, within five Business Days thereafter the
Company will deliver in exchange therefor a new Note or Notes, as may be
requested by such Holder, in the same aggregate unpaid principal amount as the
unpaid principal amount of the Note so surrendered, duly executed by the
Company. Each such Note presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer, duly executed by the registered Holder or such Holder's attorney duly
authorized in writing. Any Note issued in exchange for any other Note or upon
transfer thereof shall carry the rights to unpaid interest and interest to
accrue which were carried by the Note so exchanged or transferred, and neither
gain nor loss of interest shall result from any such transfer or exchange. Any
transfer tax relating to such transaction shall be paid by the Holder
requesting the exchange.
(iii) The Company and any agent of the Company may deem and
treat the Person in whose name any Note is registered as the owner of such Note
for the purpose of receiving payment of the principal and interest on such Note
and for all other purposes whatsoever.
(c) A Holder may sell or agree to sell to one or more other Persons (a
"Participant") (except competitors of the Company) a participation in all or
any part of any Notes held by it; provided, that unless the Participant is a
Holder or an Affiliate of the transferring Holder, the principal amount of the
Notes being participated must equal or exceed $500,000 or represent 100% of the
principal amount of such Holder's Note. The Participant's rights in respect of
such participation shall be those set forth in the agreements executed by such
Holder in favor of the Participant, and such Participant shall have no direct
right under the Notes, this Agreement or the other Transaction Documents,
including rights to give consents or waivers or to execute amendments, and the
Company shall have no obligations whatsoever to any Participant. In no event
shall a Holder that sells a participation agree with the Participant to take or
refrain from taking any action hereunder or under any other Transaction
Document, except that such Holder may agree with the Participant that it will
not, without the consent of the Participant, agree to (i) extend the date fixed
for the payment of principal of or interest on the related Notes, (ii) reduce
the amount of any
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such payment of principal and (iii) reduce the rate at which interest is payable
thereon to a level below the rate at which the Participant is entitled to
receive such interest. In connection with any sale by a Holder to a Participant
of any interest in any Note, such Holder shall be required to comply with all
Requirements of Law, including without limitation all securities laws and
regulations of any Governmental Authority.
(d) A Holder may furnish any information concerning the Company or any
Subsidiary thereof in the possession of such Holder from time to time to
assignees and Participants (including prospective assignees and Participants) in
a manner reasonably necessary to assure the confidentiality of information
identified as confidential. Except as provided in the preceding sentence, each
Holder and its assignees and Participants agree to maintain in confidence, use
only for purposes of analyzing and monitoring its investment in the Company, and
not to disclose to third parties information regarding the Company furnished to
such Holder or its assignees or Participants by the Company (or in the case of
an assignment or participation, by any Holder) in writing, which writing clearly
identifies such information as confidential or through the exercise of its
inspection rights pursuant to Section 9.02(a) hereof; provided that this
confidentiality agreement shall not apply (i) to the extent that such Holder or
its assignee or Participant in its sole discretion determines that disclosure to
one or more third parties is necessary to satisfy any legal or regulatory
obligations or requests or to enforce its rights under any Transaction
Documents, (ii) to disclosures by such Holder or its assignee or Participant to
its directors, officers, employees, attorneys and accountants (provided that
such Persons shall themselves agree to maintain the confidentiality of such
information in accordance with the requirements hereof), or (iii) to any
information (A) which was publicly known or available at the time of its
disclosure to such Holder or its assignee or Participant, (B) which subsequently
becomes publicly known or available other than as a result of a breach by such
Holder or its assignee or Participant of its non-disclosure obligations under
this sentence or (C) which becomes known to such Holder or its assignee or
Participant from a source, other than from the Company, entitled to disclose the
information.
(e) Notwithstanding anything to the contrary herein or in any other
Transaction Document, after giving effect to any assignment of or participation
in the Notes, there shall be no more than an aggregate of (i) three holders of
Notes and Participants (disregarding Affiliates of the Purchasers) whose status
as a holder or Participant is ultimately derived from an assignment or
participation by BancAmerica and (ii) three holders of Notes and Participants
(disregarding Affiliates of the Purchasers) whose status as a holder or
Participant is ultimately derived from an assignment or participation by TA.
15.05 Lost, Etc. Notes. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
any Note, and (in case of loss, theft or destruction) of indemnity satisfactory
to it (which indemnity from a party other than the Holder or any Affiliate of
the Holder, in the Company's reasonable judgment, may be a secured indemnity
obligation) and upon surrender and cancellation of such Note, if mutilated,
within five Business Days thereafter the Company will deliver in lieu of such
Note a new Note in a like unpaid principal amount, duly executed by the Company,
dated as of the date to which interest has been paid thereon. The affidavit of
any Holder's treasurer or assistant treasurer (or other responsible official),
setting forth the circumstances with respect to the loss, theft or destruction
of a Note shall be accepted as satisfactory evidence thereof.
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15.06 Amendments, Determinations, Requests or Consents. Any amendment,
supplement or modification of or to any provision of this Agreement, any waiver
of any provision of this Agreement, and any consent to any departure by the
Company from the terms of any provision of this Agreement, shall be effective
(a) only if it is made or given in writing and signed by the Company and the
Selling Shareholders and the Required Holders in accordance with this Section
and (b) only in the specific instance and for the specific purpose for which
made or given; and provided, that no Holder shall have the right to give any
consent hereunder nor shall such Holder's consent be required if such Holder
has acquired any Notes in violation of Section 15.04 hereof. Notwithstanding
anything to the contrary contained herein, the consent of the Selling
Shareholders shall not be required in connection with any proposed amendment,
supplement or modification of this Agreement, or waiver or consent hereunder,
unless the rights, privileges or obligations pertaining to the Selling
Shareholders would be adversely affected thereby, in which case the consent of
such Person or Persons shall also be required.
15.07 Remedies Cumulative. No failure or delay on the part of the
Company, the Selling Shareholders, the Agent (as defined in Article XII), the
holders of Senior Indebtedness (as defined in Article XII) or any Holder in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
any Holder at law, in equity or otherwise.
15.08 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
15.09 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
15.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
15.11 Jurisdiction. Each party to this Agreement hereby irrevocably
agrees that any legal action or proceeding arising out of or relating to this
Agreement or the Notes shall be brought in the courts of the State of
California or in the United States District Court for the Northern District of
California and hereby expressly submits to the personal jurisdiction and venue
of such courts for the purposes thereof and expressly waives any claim of
improper venue and any claim that such courts are an inconvenient forum. Each
party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth in Section 15.02, such service to become effective 10 days after such
mailing.
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15.12 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH HOLDER AND THE COMPANY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE NOTES, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
15.13 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof.
15.14 Rules of Construction. Unless the context otherwise requires,
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Agreement. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require. The word "including" in this Agreement means "including
without limitation." References to defined terms and sections of the Senior
Credit Agreement shall mean the Senior Credit Agreement as in effect on the
date hereof, without giving effect to any amendment, supplement or other
modification thereto.
15.15 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein or therein. This Agreement, together with the
exhibits hereto, and the other Transaction Documents supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
15.16 Certain Expenses. The Company shall pay or reimburse (a) each
Purchaser for all out-of-pocket costs and expenses (including, without
limitation, attorneys', accountant's and consulting fees and expenses, subject,
with respect to the following clause (i) and BancAmerica's cost and expenses
only, to a limit of $250,000) in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement, the Notes and the other
Transaction Documents and the consummation of the transactions contemplated
thereby and (ii) any amendment, modification or waiver of any of the terms of
this Agreement, the Notes or the other Transaction Documents; (b) each Holder
for all costs and expenses of the Holders (including, without limitation,
reasonable attorney's fees and expenses) in connection with (i) any Event of
Default and any enforcement or collection proceedings resulting therefrom and
(ii) the enforcement of this Section 15.16; (c) each Holder for transfer,
stamp, documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement, the Notes or
the Transaction Documents or any other document referred to
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herein or therein; (d) each Holder for any fees in respect of any
Hart-Scott-Rodino Antitrust Improvement Act of 1976 filings that may be
required upon exercise of the Warrants, upon conversion of the Class B Common
Stock to Class A Common Stock or by any rights in the Investor Rights
Agreement; and (e) any fees of the Company's auditors in connection with any
reasonable exercise by any Holder of its rights pursuant to Section 9.02(c).
15.17 Funding Fee. At the Closing, the Company shall pay to BancAmerica
a funding fee equal to $175,000 and to the TA entities purchasing Notes a
funding fee of $175,000 to be allocated among such TA entities pro rata based
on the principal amount of the Notes being purchased by each TA entity.
15.18 Publicity. Except as may be required by applicable law, none of
the parties hereto shall issue a publicity release or announcement or otherwise
make any public disclosure concerning this Agreement or the transactions
contemplated hereby, without prior approval by the other parties hereto (which
approval will not be unreasonably withheld). If any announcement is required by
law to be made by any party hereto, prior to making such announcement such
party will deliver a draft of such announcement to the other parties and shall
give the other parties an opportunity to comment thereon.
15.19 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations, or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority
or any other Person) as may be reasonably required or desirable to carry out or
to perform the provisions of this Agreement or the other Transaction Documents.
Without limiting the foregoing, if any exercise of a Warrant, conversion of
Class B Common Stock to Class A Common Stock or any right under the Investor
Rights Agreement would require any Holder and the Company to make a filing
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
such Holder and the Company shall expeditiously make any such required filings.
15.20 Confidentiality. Each Purchaser agrees to take, and to cause its
Affiliates to take, normal and reasonable precautions and exercise due care to
maintain the confidentiality of all non-public information provided to it by
the Company or any Subsidiary thereof under this Agreement or any other
Transaction Document, except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by such
Purchaser or (ii) was or becomes available on a non-confidential basis from a
source other than the Company (provided that such source is not bound by a
confidentiality agreement with the Company or any Subsidiary known to such
Purchaser); provided, however, that any Purchaser may disclose such information
(A) at the request of or pursuant to any requirement of any governmental
authority to which such Purchaser is subject or in connection with an
examination of such Purchaser by any such authority, (B) pursuant to subpoena
or other court process, (C) when required to do so in accordance with the
provisions of any applicable law, (D) to the extent reasonably required in
connection with any litigation or proceeding to which the Purchaser or any of
its Affiliates may be a party; (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other
Transaction Document, (F) to such Purchaser's independent auditors and other
professional advisors; provided that such
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professional advisor agrees in writing to keep such information confidential to
the same extent required of the Purchaser, (G) to any Participant or transferee
or assignee, actual or potential, and its professional advisors, provided that
such Person or professional advisor to such Person agrees in writing to keep
such information confidential to the same extent required of the Purchaser
hereunder, (H) as to any Purchaser or its Affiliate, as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which the Company or any Subsidiary is party or is deemed party with such
Purchaser or such Affiliate, and (I) to its Affiliates.
15.21 Permitted Redemptions. The Purchasers hereby consent to the
Permitted Redemptions for purposes of Section 506 of the California General
Corporation Law. In regard to the Permitted Redemptions, the Purchasers agree
not to initiate any claim against any current director of the Company under
Section 174(a) of the Delaware General Corporation Law or against any current
stockholder of the Company for any violation of Section 160(a)(1) of the
Delaware General Corporation Law. Notwithstanding the foregoing, the Purchasers
shall be entitled to make such a claim under the Delaware General Corporation
Law if the Company or any other creditor of the Company asserts such a claim.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized as
of the date first above written.
COMPANY:
CUPERTINO ELECTRIC, INC.
By: /s/ JAMES S. RYLEY
---------------------------------------------
Name: James S. Ryley
Title: President & CEO
PURCHASERS:
BANCAMERICA CAPITAL INVESTORS
SBIC I, L.P.
By: BancAmerica Capital Management SBIC I, LLC,
Its general partner
By: /s/ ANN B. HAYES
---------------------------------------------
Ann B. Hayes, Managing Director
TA/ADVENT VIII L.P.
By: TA Associates VIII L.L.C., its General Partner
By: TA Associates, Inc., its Manager
By: /s/ ROGER B. KAFKER
------------------------------------
TA/ADVENT ATLANTIC AND PACIFIC IV L.P.
By: TA Associates AP IV L.P., its General Partner
By: TA Associates, Inc., its General Partner
By: /s/ ROGER B. KAFKER
------------------------------------
86
TA INVESTORS LLC
By: TA Associates Inc., its Manager
By: /s/ ROGER B. KAFKER
------------------------------------
TA EXECUTIVES FUND LLC
By: TA Associates, Inc., its Manager
By: /s/ ROGER B. KAFKER
------------------------------------
TA SUBORDINATED DEBT FUND, L.P.
By: TA Associates SDF LLC, its General Partner
By: TA Associates, Inc., its Manager
By: /s/ ROGER B. KAFKER
------------------------------------
------------------------------------
Roger Kafker, Managing Director
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SELLING SHAREHOLDERS
/s/ JAMES S. RYLEY
------------------------------------------
James S. Ryley
/s/ WALTER E. RYLEY
------------------------------------------
Walter E. Ryley
/s/ EUGENE A. RAVIZZA
------------------------------------------
Eugene A. Ravizza
/s/ CLARANNE R. LONG
------------------------------------------
Claranne R. Long
CLARANNE RAVIZZA LONG TRUST
By: /s/ CLARANNE R. LONG
----------------------------------------
Name: Claranne R. Long
--------------------------------------
Title: Trustee
-------------------------------------
RAVIZZA CHILDREN'S TRUST II
By: /s/ CLARANNE R. LONG
----------------------------------------
Name: Claranne R. Long
--------------------------------------
Title: Trustee
-------------------------------------
RAVIZZA CHILDREN'S TRUST III
By: /s/ CLARANNE R. LONG
----------------------------------------
Name: Claranne R. Long
--------------------------------------
Title: Co-Trustee
-------------------------------------
88
Exhibit A
Form of Note
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH
LAWS.
THIS NOTE IS SUBJECT TO THE TERMS (INCLUDING THE SUBORDINATION PROVISIONS OF
ARTICLE XII THEREOF) OF A SENIOR SUBORDINATED NOTE, WARRANT AND COMMON STOCK
PURCHASE AGREEMENT, DATED AS OF JUNE 21, 2000, BY AND AMONG CUPERTINO ELECTRIC,
INC., AS ISSUER, AND BANCAMERICA CAPITAL INVESTORS SBIC I, L.P., TA/ADVENT VIII
L.P., TA/ATLANTIC AND PACIFIC IV L.P., TA EXECUTIVES FUND LLC, TA INVESTORS
LLC, TA SUBORDINATED DEBT FUND, L.P. and GPH CE PARTNERS, AS PURCHASERS AND
JAMES S. RYLEY, WALTER E. RYLEY, EUGENE A. RAVIZZA, CLARANNE R. LONG, THE
CLARANNE RAVIZZA LONG TRUST, THE RAVIZZA CHILDREN'S TRUST II AND THE RAVIZZA
CHILDREN'S TRUST III, AS SELLING SHAREHOLDERS (AS AMENDED OR OTHERWISE
MODIFIED, THE "NOTE PURCHASE AGREEMENT").
79
89
CUPERTINO ELECTRIC, INC.
SENIOR SUBORDINATED NOTE DUE JUNE 21, 2007
June 21, 2000
FOR VALUE RECEIVED, the undersigned CUPERTINO ELECTRIC, INC., a
California corporation (the "Company"), hereby promises to pay to
_____________________________, a ________ (the "Purchaser"), or registered and
permitted assigns, the principal amount of __________________ Dollars
($__________) [should equal 50% of principal balance] on June 21, 2006 and
________________________________ Dollars ($_____________) [should equal
remaining balance] on June 21, 2007, with interest (computed on the basis of a
360-day year consisting of twelve 30-day months) payable in the manner provided
below (i) on the unpaid balance thereof at the rate of twelve percent (12%) per
annum from the date hereof, quarterly on the last day of March, June, September
and December of each year (provided that if the last day of any such month is
not a Business Day, then on the next succeeding Business Day) (each, a "Payment
Date"), commencing with the Payment Date next succeeding the date hereof, until
the principal hereof shall have become due and payable, and (ii) upon and
during the occurrence of any Event of Default (as defined in the Note Purchase
Agreement), quarterly as aforesaid on any amount then in default (or, at the
option of the registered holder, on demand) at the rate of fourteen percent
(14%) per annum (but only to the extent permitted by law). The principal amount
of this Note shall be payable one-half on June 21, 2006 with all remaining
principal payable in full on June 21, 2007.
Payment of interest herein may be made, for the interest periods ending
on June 30, 2000, September 30, 2000, December 31, 2000, March 31, 2001, June
30, 2001, September 30, 2001, December 31, 2001, and March 31, 2002 only, at
the option of the Company, in cash or by delivery by the Company to the Holder
hereof of a promissory note substantially in the form of this Note and in the
principal amount of the interest payment then due (a "Pik Note"). Each Pik Note
issued in payment of interest hereunder shall be deemed one of the Notes issued
under the Note Purchase Agreement and shall be entitled to all of the benefits
thereof and the obligations thereunder. Payment of interest for any other
interest periods shall be made in immediately available funds.
No provision of this Note shall be deemed to establish or require the
payment of interest at a rate in excess of the maximum rate permitted under
applicable law. In the event that the rate of interest required to be paid
under this Note exceeds the maximum rate permitted under applicable law, the
rate of interest required hereunder shall be automatically reduced to the
maximum rate permitted by applicable law.
This senior subordinated note (the "Note") is issued pursuant to the
Note Purchase Agreement and is entitled to the benefits thereof and is
subordinated in right of payment and collection to the payment of the Senior
Indebtedness (as defined in the Note Purchase Agreement) to the extent and in
the manner set forth in Article XII of the Note Purchase Agreement.
This Note is a registered Note and, as provided and subject to the
restrictions contained in the Note Purchase Agreement, upon surrender of this
Note for registration of transfer, duly
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endorsed, or accompanied by a written instrument of transfer duly executed by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF CALIFORNIA AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF SUCH STATE.
The Company may redeem this Note in whole or in part in accordance with
the terms and provisions of the Note Purchase Agreement. This Note is subject
to mandatory redemption by the Company in certain circumstances specified in
the Note Purchase Agreement and the maturity hereof may be accelerated
following an Event of Default (as defined in the Note Purchase Agreement), all
as provided in the Note Purchase Agreement, to which reference is made for the
terms and conditions of such circumstances and provisions. In the event this
Note is not paid when due, the Company will pay, in addition to principal and
interest, all costs of collection, including reasonable attorneys' fees, and
the holder hereof shall be entitled to all the rights and remedies set forth in
the Note Purchase Agreement.
All payments in respect of a partial redemption of this Note shall be
applied first to all costs, expenses, indemnities and other amounts payable
hereunder and under the Note Purchase Agreement, then to payment of default
interest, if any, then to payment of accrued interest and thereafter to payment
of principal.
Except as expressly provided herein or in the Note Purchase Agreement,
the undersigned hereby waives presentment, demand, protest and all other
notices of any kind.
IN WITNESS WHEREOF, this Note is executed on the date first above
written.
CUPERTINO ELECTRIC, INC.
[CORPORATE SEAL]
By:
---------------------------------
Name:
Title:
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SCHEDULE 10.05
SHAREHOLDERS' AGREEMENTS
(a) Shareholders Agreement, dated as of March 17, 2000, among Oldco and
Farrella, Braun & Martel and Eugene A. Ravizza, James S. Ryley, Claranne
Ravizza Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II,
The Ravizza Childrens's Trust III and Walter E. Ryley;
(b) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Peter Stoneberg and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
(c) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and John Boncher and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza Long,
The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The Ravizza
Childrens's Trust III and Walter E. Ryley;
(d) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Michael Jurewicz and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
(e) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and James Medefesser and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
(f) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Rudy Bergthold and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
(g) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Darrell Bender and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
(h) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Bruce Baxter and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza Long,
The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The Ravizza
Childrens's Trust III and Walter E. Ryley;
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(i) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Alexander Tanasescu and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
(j) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Rosemarie Baldwin and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
(k) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Michael Garner and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
(l) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Linda Pinza and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza Long,
The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The Ravizza
Childrens's Trust III and Walter E. Ryley;
(m) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Michael Greenawalt and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
(n) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Richard Thiede and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
(o) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Eric Asbell and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza Long,
The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The Ravizza
Childrens's Trust III and Walter E. Ryley;
(p) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Rod Beckmen and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza Long,
The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The Ravizza
Childrens's Trust III and Walter E. Ryley;
(q) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Michael Glogovac and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley;
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(r) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and Hossein Tofangsazan and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza
Long, The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The
Ravizza Childrens's Trust III and Walter E. Ryley; and
(s) the Shareholders Agreement, dated as of March 17, 2000, among Oldco
and John Stice and Eugene A. Ravizza, James S. Ryley, Claranne Ravizza Long,
The Claranne Ravizza Long Trust, The Ravizza Children's Trust II, The Ravizza
Childrens's Trust III and Walter E. Ryley.