EXHIBIT 10.24 SECURITIES PURCHASE AGREEMENT, DATED NOVEMBER 2, 1994 AS
AMENDED ON FEBRUARY 20, 1996, AMONG REGISTRANT, ELECTRA INVESTMENT TRUST
P.L.C. AND ELECTRA ASSOCIATES, INC.
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XxXXXXX AIRCRAFT HOLDINGS, INC.
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SECURITIES PURCHASE AGREEMENT
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12% Senior Subordinated Notes due December 31, 2001
($7,000,000)
Warrants to Purchase Shares of Common Stock
(Initially Equal on an Aggregate Basis to 15%
of the Fully-Diluted Common Stock,
Subject to Adjustment in Certain Events)
Dated as of November 2, 1994
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TABLE OF CONTENTS
(Not Part of Agreement)
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PAGE
1. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PURCHASE AND SALE OF SECURITIES . . . . . . . . . . . . . . . . . . 1
3. CLOSING OF SALE OF SECURITIES . . . . . . . . . . . . . . . . . . . 2
4. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . 2
4A. OPINION OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . 2
4B. REPRESENTATIONS AND WARRANTIES; NO DEFAULT . . . . . . . . . . 3
4C. APPROVALS AND CONSENTS . . . . . . . . . . . . . . . . . . . . 3
4D. PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . 3
4E. NO ADVERSE ACTION OR DECISION . . . . . . . . . . . . . . . . 3
4F. MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . 4
4G. PURCHASE PERMITTED BY APPLICABLE LAWS . . . . . . . . . . . . 4
4H. COMPLIANCE WITH SECURITIES LAWS . . . . . . . . . . . . . . . 4
4I. COMPLIANCE WITH AGREEMENTS . . . . . . . . . . . . . . . . . . 4
4J. FINANCING FEE AND OTHER FEES AND EXPENSES . . . . . . . . . . 5
4K. TERMS OF SENIOR FINANCING ACCEPTABLE . . . . . . . . . . . . . 5
4L. PREFERRED STOCK . . . . . . . . . . . . . . . . . . . . . . . 5
4M. INCENTIVE PLAN . . . . . . . . . . . . . . . . . . . . . . . 5
4N. SHAREHOLDERS AGREEMENT . . . . . . . . . . . . . . . . . . . . 5
4O. REGISTRATION RIGHTS AGREEMENT . . . . . . . . . . . . . . . . 5
4P. SUBORDINATION TO NOTES . . . . . . . . . . . . . . . . . . . . 5
4Q. MINORITY INTEREST . . . . . . . . . . . . . . . . . . . . . . 5
4R. INFORMATION AND MATERIALS . . . . . . . . . . . . . . . . . . 5
5. PREPAYMENTS AND PURCHASE OF NOTES . . . . . . . . . . . . . . . . . 5
5A. REQUIRED PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . 6
5B. OPTIONAL PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . 6
5C. NOTICE OF OPTIONAL PREPAYMENTS . . . . . . . . . . . . . . . . 6
5D. PARTIAL PREPAYMENTS PRO RATA . . . . . . . . . . . . . . . . . 6
5E. RETIREMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . 6
6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 7
6A. FINANCIAL STATEMENTS AND OTHER REPORTS . . . . . . . . . . . . 7
6B. INSPECTION OF PROPERTY . . . . . . . . . . . . . . . . . . . . 10
6C. COVENANT TO SECURE NOTES EQUALLY . . . . . . . . . . . . . . . 11
6D. MAINTENANCE OF PROPERTIES; INSURANCE . . . . . . . . . . . . . 11
6E. CORPORATE EXISTENCE, ETC . . . . . . . . . . . . . . . . . . . 12
6F. PAYMENT OF TAXES AND CLAIMS . . . . . . . . . . . . . . . . . 12
(i)
6G. COMPLIANCE WITH LAWS, ETC . . . . . . . . . . . . . . . . . . 12
6H. BOARD MEMBER; ATTENDANCE AT BOARD MEETINGS . . . . . . . . . . 12
6I. SECURITIES MATTERS . . . . . . . . . . . . . . . . . . . . . . 13
6J. RESERVATION OF SHARES . . . . . . . . . . . . . . . . . . . . 13
6K. XXXX-XXXXX FILINGS . . . . . . . . . . . . . . . . . . . . . . 13
6L. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . 13
6M. MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6N. INTERCOMPANY NOTE . . . . . . . . . . . . . . . . . . . . . . 14
7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 14
7A. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . 14
7B. RESTRICTIONS ON DEBT . . . . . . . . . . . . . . . . . . . . . 14
7C. RESTRICTIONS ON SALES, MERGERS AND CONSOLIDATIONS . . . . . . 15
7D. RESTRICTIONS ON LIENS . . . . . . . . . . . . . . . . . . . . 15
7E. RESTRICTIONS ON DIVIDENDS AND REPURCHASES . . . . . . . . . . 17
7F. RESTRICTIONS ON TRANSACTIONS WITH CERTAIN PARTIES . . . . . . 17
7G. RESTRICTIONS ON INVESTMENTS . . . . . . . . . . . . . . . . . 18
7H. RESTRICTIONS ON SALE AND LEASEBACK TRANSACTIONS . . . . . . . 18
7I. RESTRICTIONS ON SUBSIDIARIES . . . . . . . . . . . . . . . . . 18
7J. ACTION AFFECTING PAYMENTS ON NOTES . . . . . . . . . . . . . . 18
7K. NO AMENDMENT OF CHARTER OR BY-LAWS . . . . . . . . . . . . . . 18
7L. COMPLIANCE WITH ERISA . . . . . . . . . . . . . . . . . . . . 19
8. SUBORDINATION OF THE NOTES . . . . . . . . . . . . . . . . . . . . 20
9. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9A. INDEMNIFICATION BY COMPANY . . . . . . . . . . . . . . . . . . 23
9B. INDEMNIFICATION BY PURCHASERS . . . . . . . . . . . . . . . . 23
9C. PROCEDURES UNDER INDEMNIFICATION . . . . . . . . . . . . . . . 23
10. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 24
10A. DEFAULT; ACCELERATION . . . . . . . . . . . . . . . . . . . . 24
10B. RESCISSION OF ACCELERATION . . . . . . . . . . . . . . . . . . 26
10C. NOTICE OF ACCELERATION OR RESCISSION . . . . . . . . . . . . . 27
10D. OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . 27
11. REPRESENTATIONS BY THE COMPANY . . . . . . . . . . . . . . . . . . 27
11A. ORGANIZATION; CORPORATE AUTHORITY . . . . . . . . . . . . . . 27
11B. BUSINESS; FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . 28
11C. CAPITAL STOCK AND RELATED MATTERS . . . . . . . . . . . . . . 29
11D. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11E. OUTSTANDING DEBT . . . . . . . . . . . . . . . . . . . . . . . 29
11F. TITLE TO PROPERTIES . . . . . . . . . . . . . . . . . . . . . 30
11G. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11H. CONFLICTING AGREEMENTS AND OTHER MATTERS . . . . . . . . . . . 30
11I. PATENTS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . 31
11J. OFFERING OF SECURITIES . . . . . . . . . . . . . . . . . . . . 31
(ii)
11K. BROKER'S OR FINDER'S COMMISSIONS . . . . . . . . . . . . . . . 31
11L. COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . . . 32
11M. INVESTMENT COMPANY ACT . . . . . . . . . . . . . . . . . . . . 32
11N. PUBLIC UTILITY HOLDING COMPANY ACT . . . . . . . . . . . . . . 32
11O. FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT . . . . . . . . . 33
11P. GOVERNMENTAL CONSENTS, ETC . . . . . . . . . . . . . . . . . . 33
11Q. COMPLIANCE WITH ERISA . . . . . . . . . . . . . . . . . . . . 33
11R. EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . 35
11S. MATERIAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 35
11T. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . 35
11U. PRODUCTS LIABILITY . . . . . . . . . . . . . . . . . . . . . . 38
11V. SOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12. REPRESENTATIONS BY THE PURCHASERS . . . . . . . . . . . . . . . . . 39
12A. ORGANIZATION, AUTHORIZATION, ETC . . . . . . . . . . . . . . . 39
12B. PURCHASE FOR INVESTMENT . . . . . . . . . . . . . . . . . . . 39
12C. SOURCE OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . 39
13. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14. GUARANTEE OF NOTES AND OTHER OBLIGATIONS . . . . . . . . . . . . . 53
14A. OBLIGATIONS GUARANTEED . . . . . . . . . . . . . . . . . . . . 53
14B. OBLIGATIONS UNCONDITIONAL . . . . . . . . . . . . . . . . . . 54
14C. WAIVERS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . 55
14D. OBLIGATIONS UNIMPAIRED . . . . . . . . . . . . . . . . . . . . 55
14E. WAIVER OP SUBROGATION, ETC . . . . . . . . . . . . . . . . . . 56
14F. RESCISSION OF PAYMENT . . . . . . . . . . . . . . . . . . . . 56
14G. ELECTION TO PERFORM OBLIGATIONS . . . . . . . . . . . . . . . 56
14H. RIGHTS OF CONTRIBUTION . . . . . . . . . . . . . . . . . . . . 56
14I. LIMITATION ON XXXX GUARANTEE . . . . . . . . . . . . . . . . . 58
14J. LIMITATION ON XXXXXX LIABILITY . . . . . . . . . . . . . . . . 58
14K. LIMITATION ON GUTERMANN LIABILITY . . . . . . . . . . . . . . 58
14L. GENERAL LIMITATION ON GUARANTEES . . . . . . . . . . . . . . . 58
14M. SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
15. ADVISORY FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
16. WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
16A. TERM; EXERCISE . . . . . . . . . . . . . . . . . . . . . . . . 59
16B. SERIES OF WARRANTS AND TRIGGERING EVENT . . . . . . . . . . . 59
16C. PUT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
16D. PENALTY WARRANTS . . . . . . . . . . . . . . . . . . . . . . . 62
16E. ANTIDILUTION PROVISIONS . . . . . . . . . . . . . . . . . . . 62
16F. REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . 62
16G. VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
17. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
17A. PAYMENTS WITH RESPECT TO SECURITIES . . . . . . . . . . . . . 62
17B. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(iii)
17C. AMENDMENTS, CONSENTS AND WAIVERS . . . . . . . . . . . . . . . 64
17D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF
NOTES AND WARRANTS . . . . . . . . . . . . . . . . . . . . . . 64
17E. PERSONS DEEMED OWNERS; PARTICIPATIONS . . . . . . . . . . . . 65
17F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 66
17G. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . 66
17H. CERTAIN RELATIONSHIPS . . . . . . . . . . . . . . . . . . . . 66
17I. DISCLOSURE TO OTHER PERSONS . . . . . . . . . . . . . . . . . 66
17J. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
17K. DESCRIPTIVE HEADINGS . . . . . . . . . . . . . . . . . . . . . 67
17L. SATISFACTION REQUIREMENT . . . . . . . . . . . . . . . . . . . 67
17M. GOVERNING LAW; JURISDICTION . . . . . . . . . . . . . . . . . 68
17N. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 68
EXHIBITS:
EXHIBIT 1(a) -- Form of Notes
EXHIBIT 1(b) -- Form of Warrants
EXHIBIT 4A -- Form of Opinion of Xxxxx & Xxxxxxxxx
EXHIBIT 4L -- Form of Articles of Incorporation
EXHIBIT 4N -- Amended and Restated Shareholders Agreement
EXHIBIT 4O -- Amended and Restated Registration Rights Agreement
EXHIBIT 8(a) -- Form of Agent's Certificate
SCHEDULES:
SCHEDULE 4E -- Adverse Proceedings
SCHEDULE 7A(i) -- Leverage Ratio
SCHEDULE 7A(ii) -- EBITDA Ratio
SCHEDULE 7A(iii) -- Net Worth
SCHEDULE 7A(iv) -- Fixed Charges Ratio
SCHEDULE 7D -- Liens
SCHEDULE 7F -- Transactions With Certain Parties
SCHEDULE 11C -- Capital Stock and Registration Rights
SCHEDULE 11D -- Litigation
SCHEDULE 11E -- Debt
SCHEDULE 11H -- Conflicting Agreements
SCHEDULE 11I -- Intangible Rights
SCHEDULE 11J -- Offerings of Securities
SCHEDULE 11R -- Employee Matters
SCHEDULE 11S -- Material Agreements
SCHEDULE 11T -- Environmental Matters
SCHEDULE 17A -- Purchasers' Wire Transfer Instructions
(iv)
SECURITIES PURCHASE AGREEMENT, dated as of November 2, 1994 (this
"Agreement"), by and among XxXXXXX AIRCRAFT HOLDINGS, INC., an Ohio
Corporation (the "Company"), ELECTRA INVESTMENT TRUST P.L.C., a corporation
organized under the laws of England ("EIT"), and ELECTRA ASSOCIATES, INC., a
Delaware corporation ("Associates" and, together with EIT, the "Purchasers").
Capitalized terms used in this Agreement are defined in paragraph 13 hereof.
WHEREAS, the Purchasers desire, upon the terms and subject to the
conditions set forth herein, to purchase from the Company the Securities (as
hereinafter defined); and
WHEREAS, the Company desires, upon the terms and subject to the
conditions set forth herein, to sell the Securities to the Purchasers.
NOW, THEREFORE, the parties hereto agree as follows:
1. BACKGROUND. In order to provide funds for the expansion and
operation of its business, the Company has authorized the issuance and
delivery of:
(i) its senior subordinated notes, substantially in the form of
Exhibit 1(a) hereto (herein, together with any such notes which may be
issued pursuant to any provision of this Agreement and any such notes which
may be issued in substitution or exchange therefor, the "Notes"), in the
aggregate principal amount of $7,000,000, to be dated the date of issue
thereof (the "Issue Date"), to mature December 31, 2001, and to bear interest
on the unpaid balance thereof from the Issue Date until the principal
thereof shall become due and payable at the rate of 12% per annum, payable
semi-annually in cash in arrears; and
(ii) warrants, substantially in the form of Exhibit 1(b) hereto
(herein, together with any such warrants which may be issued pursuant to any
provision of this Agreement or any provision contained in the warrants and
any such warrants which may be issued in addition to or in substitution or
exchange therefor, the "Warrants"), to purchase for a price of $0.01 per share
certain shares of the Company's common stock, without par value (the "Common
Stock").
The Notes and the Warrants, and any other security of the Company issued to
the Purchasers in addition to or in substitution or exchange therefor, are
referred to herein as the "Securities."
2. PURCHASE AND SALE OF SECURITIES. Upon the terms and subject to
the conditions set forth herein, the Company hereby agrees to sell to the
Purchasers, and the Purchasers hereby agree to purchase from the Company, the
following:
(i) one or more Notes, registered in the Purchasers' names or
those of the Purchasers' nominees, as the Purchasers shall request, and,
subject to paragraph 17D hereof, in such denominations as the Purchasers
shall request, in an aggregate principal amount of $7,000,000, at a purchase
price of 100% of the aggregate principal amount thereof; and
(ii) one or more series of Warrants, registered in the
Purchasers' name or those of the Purchasers' nominees, as the Purchasers
shall request, to purchase for a price of $0.01 per share that number of
shares of Common Stock as shall be initially equal to 15% of the issued and
outstanding Common Stock on a Fully Diluted basis, which percentage is subject
to adjustment as set forth in this Agreement and in the Warrants.
3. CLOSING OF SALE OF SECURITIES. The closing of the
transactions contemplated hereby (the "Closing") shall take place at the
offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx two Business Days after the date on which all the conditions specified
in paragraph 4 hereof shall have been satisfied, or on such other date or at
such other place as the Purchasers and the Company may agree (the "Closing
Date"). The Company will give the Purchasers five days' notice of the Closing
Date and the time of Closing. At the Closing, the Company will deliver to
the Purchasers the Notes and Warrants, against payment of the purchase price
therefor by transfer in lawful money of the United States of America in
immediately available funds to such bank and account as the Company may
direct in writing. At the Closing, the Company will pay to Electra Inc., a
Delaware corporation ("Electra"), by transfer in lawful money of the United
States of America in immediately available funds to such bank and account as
Electra may direct in writing, a financing fee in the amount of $140,000
(the "Financing Fee"). If at the Closing the Company shall fail to (i)
tender to the Purchasers any of the Securities, (ii) pay to Electra the
Financing Fee or (iii) have satisfied any of the closing conditions specified
herein, or if such closing conditions shall not have been waived by the
Purchasers, the Purchasers shall, at the Purchasers' election, be relieved
of all further obligations under this Agreement, without thereby waiving any
other rights the Purchasers may have by reason of such failure.
4. CONDITIONS OF CLOSING. The Purchasers' obligation to
purchase and pay for the Securities is subject to the satisfaction prior to
or at the Closing of the following conditions:
4A. OPINION OF COUNSEL. The Purchasers shall have received from
Xxxxx & Xxxxxxxxx, counsel for the Company, a
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favorable opinion substantially in the form attached hereto as Exhibit 4A,
and covering any other matters incident to the transactions contemplated
hereby as the Purchasers may reasonably request, addressed to the Purchasers
and dated the Closing Date. To the extent that the opinion referred to above
in this paragraph 4A is rendered in reliance upon the opinion of any other
counsel, the Purchasers shall have received a copy of such other opinion, or
a letter from such other counsel, dated the Closing Date and addressed to
the Purchasers, authorizing the Purchasers to rely on such other counsel's
opinion.
4B. REPRESENTATIONS AND WARRANTIES: NO DEFAULT. The
representations and warranties of the Company contained in this Agreement,
and those otherwise made in writing by or on behalf of the Company in
connection with the transactions contemplated hereby, shall be true in all
material respects when made and at the time of the Closing, except as
affected by the consummation of the transactions contemplated hereby;
provided, however, that there shall exist at the time of the Closing and
after giving effect to such transactions no Default or Event of Default. The
Company shall have delivered to the Purchasers an Officers' Certificate,
dated the Closing Date, to all such effects.
4C. APPROVALS AND CONSENTS. The Company shall have duly received
all authorizations, waivers, consents, approvals, licenses, franchises,
permits and certificates (collectively, the "Approvals") by or of all federal,
state and local governmental authorities, and all material Approvals by or of
all other Persons, necessary or advisable for the issuance of the Securities,
and all such Approvals shall be in full force and effect at the time of the
Closing. The Company shall have delivered to the Purchasers an Officers'
Certificate, dated the Closing Date, to such effect.
4D. PROCEEDINGS. All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to the Purchasers and their special counsel, and the Purchasers
and their special counsel shall have received all counterpart originals or
certified or other copies of such documents as they may reasonably request.
4E. NO ADVERSE ACTION OR DECISION. Except as set forth in
Schedule 4E attached hereto, there shall be no action, suit, investigation
or proceeding pending, or, to the best of the Purchasers' or the Company's
knowledge, threatened, against or affecting the Purchasers or the Company,
any of the Purchasers' or the Company's properties or rights, or any of the
Purchasers'
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or the Company's Affiliates, officers or directors, before any court,
arbitrator or administrative or governmental body which (i) seeks to restrain,
enjoin, prevent the consummation of or otherwise affect the transactions
contemplated by this Agreement or (ii) questions the validity or legality of
any such transactions or seeks to recover damages or to obtain other relief in
connection with any such transactions, and, to the best of the Purchasers' or
the Company's knowledge, there shall be no valid basis for any such action,
proceeding or investigation.
4F. MATERIAL ADVERSE CHANGE. Since December 31, 1993, there has
not been or been threatened any material adverse change in the condition
(financial or otherwise), assets, properties, operations or prospects of the
Company or any of its Subsidiaries, or any condition, event or act which is
likely to lead to a material adverse change in the condition, assets,
properties, operations or prospects of the Company or any of its Subsidiaries,
or which would materially and adversely affect the Company's ability to repay
the Notes or the ability of the Subsidiary Guarantors to perform their
obligations hereunder.
4G. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Securities shall not violate any applicable law or governmental
regulation (including, without limitation, Section 5 of the Securities Act or
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and shall not subject the Purchasers to any tax, penalty, liability or other
onerous condition under or pursuant to any applicable law or governmental
regulation. The Purchasers shall have received such certificates or other
evidence of compliance as the Purchasers may request.
4H. COMPLIANCE WITH SECURITIES LAWS. The issuance, offering and
sale of the Securities under this Agreement shall have complied with all
applicable requirements of federal and state securities laws, and the
Purchasers shall have received such evidence of compliance as the Purchasers
may request.
4I. COMPLIANCE WITH AGREEMENTS. The Company and each of its
Subsidiaries are in compliance with all of the material covenants, terms and
conditions of all loan documents, shareholder agreements and other material
agreements of the Company (including all existing or proposed credit
facilities, indentures and the like) which will remain or be outstanding
immediately after the Closing Date, and such agreements permit the
performance by the Company and its Subsidiaries of all of the obligations
and transactions contemplated by this Agreement. The Company shall have
delivered to the Purchasers an Officers' Certificate, dated the Closing Date,
to such effect.
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of the principal amount of the Notes being prepaid, together with all
accrued and unpaid interest thereon to the date of such prepayment (the
"Purchase Price").
5A. REQUIRED PREPAYMENTS. The Notes shall, at the option of a
Significant Holder, become immediately due and payable upon the occurrence
of (i) a Change of Control or (ii) an Initial Public Offering. Upon the
occurrence of a Change of Control or an Initial Public Offering and notice
by such Significant Holder, the Company will pay to each such holder an amount
in cash equal to the Purchase Price by transferring immediately available
funds to such bank and account therein as shall be designated by such holder,
against delivery of the Notes being prepaid.
5B. OPTIONAL PREPAYMENTS. The Notes may be prepaid at the option
of the Company, at any time or from time to time, in whole or in part (but,
if in part, only in integral multiples of $100,000), by paying to each
holder an amount in cash equal to the Purchase Price for the amount of Notes
being prepaid by transferring immediately available funds to such bank and
account therein as shall be designated by such holder, against delivery of
the Notes being prepaid.
5C. NOTICE OF OPTIONAL PREPAYMENTS. The Company shall give each
holder of Notes written notice of any prepayment to be made pursuant to
paragraph 5B hereof not less than 30 Business Days prior to the proposed
prepayment date, specifying such prepayment date and the principal amount of
the Notes to be prepaid. The Purchase Price for the Notes specified in such
notice shall become due and payable on such prepayment date.
5D. PARTIAL PREPAYMENTS PRO RATA. Upon any partial prepayment of
Notes, The principal amount so prepaid shall be allocated to all Notes at
the time outstanding in proportion to the respective outstanding principal
amounts thereof.
5E. RETIREMENT OF NOTES. The Company shall not prepay, purchase
or otherwise retire Notes held by any holder, in whole or in part, directly
or indirectly, prior to their stated final maturity, unless the Company
shall have offered to prepay, purchase or otherwise retire, as the case may
be, the same proportion of the aggregate principal amount of Notes held by each
other holder of such Notes at the time outstanding upon the same terms and
conditions. Any Notes so prepaid, purchased or otherwise retired by the
Company (or its Subsidiaries or Affiliates) shall not be deemed to be
outstanding for any purpose under this Agreement.
-6-
6. AFFIRMATIVE COVENANTS. The Company covenants that from and after
the date of this Agreement through the Closing and thereafter so long as no
Triggering Event has occurred (unless otherwise provided below):
6A. FINANCIAL STATEMENTS AND OTHER REPORTS. For so long as the
Purchasers hold any Note, any Warrant exchangeable into at least 5% of the
issued and outstanding Common Stock on a Fully Diluted basis, or at least 5%
of the issued and outstanding Common Stock on a Fully Diluted basis, the
Company will deliver, or cause to be delivered to each Significant Holder:
(i) within 30 days prior to the end of each fiscal year,
but no earlier than 60 days prior to the end of such fiscal year, a budget
(on a monthly basis) for the Company and its Subsidiaries for the following
fiscal year (including consolidating and consolidated statements of income,
cash flow and balance sheets prepared in accordance with GAAP), in reasonable
detail and reasonably satisfactory in form and scope to the Significant
Holder;
(ii) as soon as available and in any event within 30 days
after the end of each month, consolidating and consolidated statements of
income and cash flow of the Company and its Subsidiaries for such month and
for the period from the beginning of the current fiscal year to the end of
such month and a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such period and, beginning in fiscal year 1995,
setting forth, in each case, in comparative form, figures for the
corresponding month and period in the preceding fiscal year and the budget
for such month and for the period from the beginning of the current fiscal
year to the end of such month, all in reasonable detail and reasonably
satisfactory in form and scope to the Significant Holder and certified by an
authorized financial officer of the Company as fairly presenting in all
material respects the financial condition and results of operation of the
Company and its Subsidiaries on a consolidated basis in accordance with GAAP;
(iii) only after the occurrence of an Initial Public
Offering, or if the Company prepares such statements in the ordinary course,
as soon as practicable and in any event within 45 days after the end of each
fiscal quarter of the Company, consolidating and consolidated statements of
income and cash flow of the Company and its Subsidiaries for such quarter and
for the period from the beginning of the current fiscal year to the end of
such quarter and a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, setting forth, in each case, in
comparative form, figures for the
-7-
corresponding quarter in the preceding fiscal year and the budget for such
quarter, all in reasonable detail and satisfactory in form and scope to the
Significant Holder, and certified by an authorized financial officer of the
Company as fairly presenting in all material respects the financial condition
and results of operations of the Company and its Subsidiaries on a
consolidated basis in accordance with GAAP;
(iv) as soon as available and in any event within 90 days
after the end of each fiscal year, consolidating and consolidated statements
of income, stockholders' equity and cash flow of the Company and its
Subsidiaries for such fiscal year, and the related consolidating and
consolidated balance sheets of the Company and its Subsidiaries as at the end
of such fiscal year, setting forth, in each case, in comparative form,
corresponding consolidated and consolidating figures from the preceding
fiscal year, all in reasonable detail and reasonably satisfactory in form and
scope to the Significant Holder, and accompanied (i) in the case of said
consolidated statements and balance sheet of the Company, by an opinion
thereon of independent certified public accountants of recognized national
standing (which shall be generally recognized as one of the "Big Six"
independent public accounting firms), which opinion shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Company and its Subsidiaries as at
the end of, and for, such fiscal year in accordance with GAAP, and (ii) in
the case of said consolidating statements and balance sheets, by a
certificate of an authorized financial officer of the Company, which
certificate shall state that said consolidating financial statements fairly
present the respective individual unconsolidated financial condition and
results of operations of the Company and of each of its Subsidiaries, in each
case in accordance with GAAP, consistently applied, as at the end of, and
for, such fiscal year;
(v) promptly upon transmission thereof to the shareholders
of the Company generally or to any other security holder of the Company,
including, without limitation, any holder of Senior Debt, copies of all
financial statements, financial analyses, notices, certificates (including,
without limitation, the Compliance Certificate to be furnished under the
Credit Agreement), annual reports and proxy statements so transmitted;
(vi) promptly upon receipt thereof, a copy of each other
report submitted to the Company or any of its Subsidiaries by independent
accountants in connection with any annual, interim or special audit of the
books of the Company or
-8-
any of its Subsidiaries made by such accountants, or any management letters
or similar document submitted to the Company or any of its Subsidiaries by
such accountants;
(vii) together with each delivery of financial statements
required by clauses (iii) and (iv) above, an Officers' Certificate stating
that the signers have reviewed the terms of this Agreement, the Notes and the
Warrants, and have made, or caused to be made under their supervision, a
review in reasonable detail of the transactions and condition of the Company
and its Subsidiaries during the fiscal period covered by such financial
statements, and that such review has not disclosed the existence, and that
the signers do not have knowledge of the existence, as at the date of such
Officers' Certificate, of any condition or event which would constitute a
Default or Event of Default or, if, any such condition or event exists,
specifying the nature and period of existence thereof and what action the
Company has taken or is taking or proposes to take with respect thereto;
(viii) together with each delivery of consolidated financial
statements required by clause (iv) above, a certificate of the independent
public accountants giving the report thereon, but only if, in making the
audit of such financial statements, such accountants have obtained knowledge
of any Default or Event of Default, specifying in such certificate the nature
and period of existence thereof; provided, that such accountants shall not be
liable by reason of their failure to obtain knowledge of any Default or Event
of Default which would not be disclosed in the course of an audit conducted
in accordance with generally accepted auditing standards;
(ix) promptly upon any Responsible Officer of the Company
obtaining knowledge (a) of any condition or event which constitutes a Default
or Event of Default, (b) that the holder of any Note has given any notice or
taken any other action with respect to a claimed Default or Event of Default
under this Agreement, (c) of any condition or event which, in the opinion of
management of the Company would have a material adverse effect on the
business, condition (financial or otherwise), assets, properties, operations
or prospects of the Company and its Subsidiaries, taken as a whole (other
than conditions or events applicable to the economy as a whole), (d) that any
Person has given any notice to the Company or any Subsidiary of the Company
or taken any other action with respect to a claimed Default or event or
condition of the type referred to in clause (ii) of paragraph 10A hereof, or
(e) of the institution of any litigation involving claims against the Company
in an amount equal to or greater than $100,000 with respect to any single
cause of action (unless the Company reasonably believes such litigation is
-9-
without merit and will not be determined adversely to the Company) or of any
adverse determination in any litigation involving a potential liability to
the Company equal to or greater than $100,000 with respect to any single
cause of action (unless such litigation is defended by an insurance carrier
without any reservation of rights and is reasonably expected to be fully
covered by a creditworthy insurer), an Officers' Certificate specifying the
nature and period of existence of any such condition or event, or specifying
the notice given or action taken by such holder or Person and the nature of
such claimed Default, event or condition, and what action the Company has
taken, is taking or proposes to take with respect thereto;
(x) promptly upon any Responsible Officer of the Company or
any of its ERISA Affiliates becoming aware of the occurrence of (a) any
"reportable event," as such term is defined in section 4043 of ERISA, in
connection with any Plan subject to Title IV of ERISA or section 412 of the
Code or trust, insurance contract or other funding arrangement maintained or
created thereunder or an event requiring the Company or any ERISA Affiliate
to provide security to a Plan under section 401(a)(29) of the Code, (b) any
"prohibited transaction," as such term is defined in section 4975 of the Code
or in section 406 of ERISA in connection with any Plan or any trust,
insurance contract or other funding arrangement maintained or created
thereunder, or in connection with any Welfare Plan or Multiemployer Plan or
(c) the institution of proceedings or the taking or expected taking of action
by the PBGC or the Company or any of its ERISA Affiliates to terminate or
withdraw or partially withdraw, in connection with any Plan subject to Title
IV of ERISA or section 412 of the Code or any Multiemployer Plan or any
trust, insurance contract or other funding arrangement maintained or created
thereunder, a written notice specifying the nature thereof, what action the
Company or any such Subsidiary has taken, is taking or proposes to take with
respect thereto, and, when known, any action taken or threatened by the
Internal Revenue Service or the PBGC with respect thereto;
(xi) promptly upon any material revision to the budgets
referred to in clause (i) above, such monthly budgets, as revised; and
(xii) with reasonable promptness, such other information and
data with respect to the Company or any of its Subsidiaries as such
Significant Holder may reasonably request.
6B. INSPECTION OP PROPERTY. For so long as the Purchasers hold any
Note, any Warrant exchangeable into at least 5% of the issued and outstanding
Common Stock on a Fully Diluted
-10-
basis, or at least 5% of the issued and outstanding Common Stock on a Fully
Diluted basis, the Company will permit any Person designated by any
Significant Holder in writing, at such Significant Holder's expense, to visit
and inspect any of the properties of the Company and its Subsidiaries
(provided that, unless a Default or Event of Default shall have occurred and
be continuing, such visits will not occur more frequently than once per
calendar quarter), to examine the books and financial records of the Company
and its Subsidiaries and make copies thereof or extracts therefrom and to
discuss its affairs, finances and accounts with its officers and its
independent public accountants, all at reasonable times and upon reasonable
prior notice to the Company.
6C. COVENANT TO SECURE NOTES EQUALLY. The Company will, if it or any of
its Subsidiaries shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted
by paragraph 7D hereof (unless prior written consent shall have been obtained
pursuant to paragraph 17C hereof), make or cause to be made effective
provision whereby the Notes will be secured by such Lien equally and ratably
with any and all other Debt thereby secured; provided that such security
shall not in any way alter the rights of the holders of the Senior Debt or
the Seller Note.
6D. MAINTENANCE OF PROPERTIES: INSURANCE. The Company will, and will
cause each of its Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition all properties used or useful in the
business of the Company and its Subsidiaries and from time to time will make
or cause to be made all appropriate repairs, renewals and replacements
thereof. The Company will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained, with financially sound and reputable
insurers (or, as to workers' compensation or similar insurance, in an
insurance fund or by self-insurance authorized by the laws of the applicable
jurisdiction), insurance with respect to their respective properties and
businesses against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar
businesses and similarly situated, of such type and in such amounts as are
customarily carried under similar circumstances by such corporations and as
are in good faith believed by the Company to be sufficient to prevent the
Company or a Subsidiary from becoming a co-insurer within the terms of the
policies in question.
-11-
6E. CORPORATE EXISTENCE. ETC. The Company will, and will cause each of
its Subsidiaries to, at all times preserve and keep in full force and effect
their respective corporate, partnership or other existence, and rights,
licenses and franchises material to its business, and will qualify to do
business in any jurisdiction where the failure to do so would have a material
adverse effect on the business, condition (financial or otherwise), assets,
properties or operations of the Company and its Subsidiaries, taken as a
whole.
6F. PAYMENT OF TAXES AND CLAIMS. The Company will, and will cause each
of its Subsidiaries to, pay all taxes, assessments and other governmental
charges imposed upon them or any of their respective properties or assets or
in respect of any of their respective franchises, business income or
properties before any penalty or significant interest accrues thereon, and
all claims (including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and payable and which
by law have or may become a Lien upon any of its properties or assets;
provided that no such charge or claim need be paid if being contested in good
faith by appropriate proceedings promptly instituted and diligently pursued
and if such accrual or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor.
6G. COMPLIANCE WITH LAWS. ETC. The Company will, and will cause each of
its Subsidiaries to, comply with the requirements of all applicable laws,
rules, regulations, and orders of any court or other governmental authority
(including, without limitation, those related to environmental or ERISA
compliance), the noncompliance with which could have a material adverse
effect on the business, condition (financial or otherwise), assets, property,
operations or prospects of the Company and its Subsidiaries, taken as a whole.
6H. BOARD MEMBER: ATTENDANCE AT BOARD MEETINGS.
(i) For so long as the Purchasers hold any Note, any
Warrant exchangeable into at least 5% of the issued and outstanding Common
Stock on a Fully Diluted basis, or at least 5% of the issued and outstanding
Common Stock on a Fully Diluted basis, at the Purchasers' request, the
Company will cause one Person designated by the Purchasers to be included in
any list of Persons nominated by management of the Company for election as
members of the Board of Directors of the Company (the "Board") and will take
all actions reasonably within its power to cause such Person to be elected a
member of the Board. Such director
-12-
will have the right to be a member of the Audit Committee and the
Compensation Committee of the Board, or such other committees of the Board
performing the functions typically performed by such committees.
(ii) The Company will reimburse such director for all costs
and expenses (including travel expenses) incurred in connection with such
director's attendance at meetings of the Board or any committee of the Board
upon which such director serves. The Company will pay such director annual
fees and fees for attending Board or committee meetings, if any such fees are
paid to directors; provided that the Company may offset amounts paid to
Electra as an Advisory Fee against any such director's fees.
6I. SECURITIES MATTERS. To the extent required, the Company will, and will
cause each of its Subsidiaries to, comply in all material respects with the
reporting requirements of the Securities Act and the Exchange Act, or successor
rules thereto or otherwise. The Company will cooperate with each holder of
Securities in supplying such information as may be requested by such holder
to comply with the Securities Act or Exchange Act, including Rule 144 and
Rule 144A, or successor rules thereto or otherwise.
6J. RESERVATION OF SHARES. The Company will reserve and keep reserved
at all times sufficient shares of its Common Stock for issuance upon exercise
of the Warrants and, upon such exercise, the Company will promptly issue and
deliver the shares required to be delivered, and such shares, when issued and
delivered, will be validly issued, fully paid and nonassessable.
6K. XXXX-XXXXX FILINGS. The Company or its "ultimate parent" (as
defined in the Xxxx-Xxxxx-Xxxxxx Act) will promptly prepare and file, or
cause to be prepared and filed, any notification or response to any request
for additional information required to be filed under the Xxxx-Xxxxx-Xxxxxx
Act and the rules and regulations promulgated thereunder with respect to the
acquisition of voting securities of the Company or of any other Person by the
Company.
6L. USE OF PROCEEDS. The Company will use the proceeds from the sale and
issuance of the Securities to repay existing indebtedness, repay vendor
payables, finance working capital and for future acquisition financing.
-13-
6M. MANAGEMENT. The Company will enter into an employment agreement with
terms satisfactory to the Purchasers with, and will continue the employment
of, R. Xxxx XxXxxxx, or if such employment is not continued, his replacement
shall be acceptable to the Purchasers.
6N. INTERCOMPANY NOTE. The Company will, promptly after the
satisfaction in full of its obligations under the Credit Agreement, deliver
to the Purchasers the Intercompany Note duly endorsed in blank. Xxxx agrees
to perform all of its obligations under the Intercompany Note and, after the
satisfaction in full of its obligations under the Credit Agreement and until
payment in full of all amounts payable by the Company under this Agreement,
to make all payments under the Intercompany Note directly to the Purchasers
for application to, the payment of principal and/or interest in respect of
the Notes.
7. NEGATIVE COVENANTS. The provisions of this paragraph 7 shall remain
in effect so long as any Note shall remain outstanding.
7A. FINANCIAL COVENANTS. The Company and the Subsidiary Guarantors shall
comply in all respects with each of the following financial covenants:
(i) LEVERAGE RATIO. The Company and the Subsidiary
Guarantors will not permit the Leverage Ratio to exceed the respective ratios
at any time during the respective periods set forth on Schedule 7A(i)
attached hereto.
(ii) EBITDA RATIO. The Company and the Subsidiary
Guarantors will not permit the EBITDA Ratio to exceed the respective ratios.
at any time during the respective periods set forth on Schedule 7A(ii)
attached hereto.
(iii) NET WORTH. The Company will not permit its Net Worth
to be less than the respective amounts at any time during the respective
periods set forth on Schedule 7A(iii) attached hereto.
(iv) FIXED CHARGES RATIO. The Company and the Subsidiary
Guarantors will not permit the Fixed Charges Ratio to be less than the
respective ratios at any time during the respective periods set forth on
Schedule 7A(iv) attached hereto.
7B. RESTRICTIONS ON DEBT. The Company will not, and will not permit any
of its Subsidiaries to, create, assume, incur, issue, guarantee or otherwise
become directly or indirectly liable in respect of, any Debt, except:
-14-
(i) Debt to the holders of Notes incurred by the Company
pursuant to this Agreement;
(ii) the Senior Debt, and any refinancing of the Senior Debt
(provided that no refinancing of Senior Debt shall have a principal amount
greater than the principal amount of Senior Debt at the time outstanding,
extend the maturity beyond the original maturity of the Senior Debt as of the
date hereof, increase the Applicable Margin (as defined in the Credit
Agreement) from that in effect as of the date hereof or affect the time of
payment of interest payable with respect to the Senior Debt as of the date
hereof or materially adversely affect the rights (taken as a whole) of any
holder of the Notes);
(iii) additional Senior Debt in an amount not to exceed
$1,500,000 (provided that such additional Senior Debt is provided on
substantially the terms set forth in and by the lenders party to the Credit
Agreement);
(iv) the Seller Note;
(v) Debt outstanding on the Closing Date and which is
listed on Schedule 11E attached hereto; and
(vi) Additional Debt incurred or assumed in the ordinary
course of business in an aggregate amount outstanding at any time not to
exceed $1,100,000.
7C. RESTRICTIONS ON SALES, MERGERS AND CONSOLIDATIONS. The Company will
not consolidate or merge with or into, or sell, assign, lease, convey or
otherwise dispose of all or substantially all of its properties or assets to,
or acquire all or substantially all of the properties or assets of, in one
transaction or a series of transactions, another corporation, Person or
entity, without the prior written consent of the Purchasers; provided that
nothing contained in this paragraph 7C shall prevent (i) a merger of the
Company and Tri-Star Holdings, Inc., (ii) the reincorporation in the state of
Delaware of the Company or any of its Subsidiaries or (iii) the purchase,
sale, assignment, lease, conveyance or other disposition or acquisition of
properties or assets by the Company in the ordinary course of its business.
7D. RESTRICTIONS ON LIENS. The Company or any Subsidiary Guarantor will
not, and will not permit any of their Subsidiaries to, create, incur, assume
or suffer to exist any Lien upon any of its assets or property of any
character (excluding any such property or assets owned by a customer but in
-15-
the possession of either the Company or any of its Subsidiaries), whether now
owned or hereafter acquired, except:
(i) Liens existing on the Closing Date and described on
Schedule 7D attached hereto;
(ii) Liens created in connection with the Senior Debt and
Debt permitted by paragraph 7B hereof;
(iii) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or that are being contested in good faith
and by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or the affected Subsidiaries, as the
case may be, in accordance with GAAP;
(iv) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
that are not overdue for a period of more than 30 days or that are being
contested in good faith and by appropriate proceedings and Liens securing
judgments but only to the extent for an amount and for a period not resulting
in an Event of Default hereunder;
(v) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
(vi) deposits to secure the performance of bids, trade
contracts (other than for Debt), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(vii) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of assets or property of any character or minor
imperfections in title thereto that, in the aggregate, are not material in
amount, and that do not in any case materially detract from the value of such
assets or property subject thereto or interfere with the ordinary conduct of
the business of the Company or any Subsidiary Guarantor; and
(viii) Liens upon real and/or tangible personal property
acquired after the date hereof (by purchase, construction or otherwise) by
the Company or any Subsidiary Guarantor, each of which Liens either (A)
existed on such
-16-
property before the time of its acquisition and was not created in
anticipation thereof or (B) was created solely for the purpose of securing
Debt representing, or incurred to finance, refinance or refund, the cost
(including the cost of construction) of such property; provided that (1) no
such Lien shall extend to or cover any property of the Company or any
Subsidiary Guarantor, other than the property so acquired and improvements
thereon and (2) the principal amount of Debt secured by any such Lien shall
at no time exceed 80% of the fair market value (as determined in good faith
by a senior financial officer of the Company or Subsidiary Guarantor, as
appropriate) of such property at the time it was acquired (by purchase,
construction or otherwise).
The Company, any Subsidiary Guarantor or any of their Subsidiaries will not
sign or file in any state or other jurisdiction a financing statement under
the Uniform Commercial Code which names the Company or any of its
Subsidiaries as debtor, or sign any security agreement authorizing any
secured party thereunder to file any such financing statement, if the
financing statement would perfect or protect a security interest which the
Company or any of its Subsidiaries is not entitled to create, assume, incur
or permit to exist under the foregoing provisions of this paragraph 7D.
7E. RESTRICTIONS ON DIVIDENDS AND REPURCHASES. The Company will not,
and, except for dividends or other distributions to the Company or to another
Subsidiary, will not permit any of its Subsidiaries to, declare or pay any
dividends, in cash or otherwise, or make any distributions, to its
shareholders or partners, or purchase, redeem or otherwise acquire any of its
outstanding Capital Stock, or set apart assets for a sinking or other
analogous fund for the purchase, redemption, retirement or other acquisition
of, any shares of its Capital Stock; provided, however, that notwithstanding
the foregoing, (i) Tri-Star Technologies may make those partnership
distributions to Xxxxxxxxx Xxxxxx required by the Tri-Star Technologies
General Partnership Agreement, as amended, and (ii) Xxxx may declare and pay
dividends provided such dividends are made ratably to its shareholders.
7F. RESTRICTIONS ON TRANSACTIONS WITH CERTAIN PARTIES. Except as set
forth in Schedule 7F attached hereto, the Company will not, and will not
permit any of it Subsidiaries to, sell, lease, transfer or otherwise dispose
of any of its properties or assets to, or purchase any properties or assets
from, or enter into any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing,
an "Affiliate Transaction") other than in the ordinary course of business,
unless such Affiliate Transaction is on terms
-17-
no less favorable to the Company than would have been obtained in a
comparable arms' length transaction by the Company or such Subsidiary with a
Person who is not an Affiliate of the Company or such Subsidiary.
7G. RESTRICTIONS ON INVESTMENTS. The Company will not, other than in
the ordinary course of business, purchase, acquire or agree to purchase or
acquire or invest in the business, property or assets of, or any securities
of, any other company or business, except:
(i) the Company may invest its excess cash in Cash
Equivalents; and
(ii) investments permitted by paragraphs 7C, 7E and 7F
hereof.
7H. RESTRICTIONS ON SALE AND LEASEBACK TRANSACTIONS. The Company will
not sell or transfer any of its properties to anyone with the intention of
taking back a lease of the same property or leasing other property for
substantially the same use as the property being sold or transferred,
provided that, subject to paragraph 7A hereof, the Company may continue and
extend its existing leasing arrangements and may lease, under operating
leases, fixtures, equipment and real estate in the ordinary course of
business.
7I. RESTRICTIONS ON SUBSIDIARIES. The Company will not permit any of its
Subsidiaries to issue any Capital Stock to any Person other than to the
Company or another Subsidiary of the Company unless such issuance is at fair
market value and the Company's percentage ownership in the Subsidiary is not
decreased as a result of such issuance. The Company will not permit any of
its Subsidiaries to issue any Debt to any Person other than to the Company or
another Subsidiary of the Company except as permitted under paragraph 7B
hereof.
7J. ACTION AFFECTING PAYMENTS ON NOTES. The Company will not enter into,
become a party to or otherwise become subject to any instrument evidencing or
governing the terms of any Debt, or other contract or agreement, or any
amendments or modifications of the foregoing, the provisions of which
restrict or limit the Company's ability or obligation to make payments on, or
which alter or impair the rights of any holder of, the Notes.
7K. NO AMENDMENT OF CHARTER OR BY-LAWS. The Company will not permit any
amendment of or modification to its Articles of Incorporation or Code of
Regulations, which amendment or
-18-
modification would alter or impair the rights of any holder of the Notes or
the Warrants.
7L. COMPLIANCE WITH ERISA. The Company will not, and will not permit
any of its ERISA Affiliates to:
(i) engage in any transaction in connection with which the
Company or any of its Subsidiaries could be subject to either a material
civil penalty assessed pursuant to section 502(i) or (1) of ERISA or a
material tax imposed by section 4975 of the Code;
(ii) terminate or partially terminate any Plan, or withdraw
or partially withdraw from a Multiemployer Plan, in a manner, or take any
other action, which in any case may reasonably be expected to result in any
material liability of the Company or any of its ERISA Affiliates to the PBGC
or to any Multiemployer Plan;
(iii) fail to make full payment when due of all amounts
which, under the provisions of any Plan, the Company or any of its ERISA
Affiliates is required to pay as contributions thereto under section 302 of
ERISA and section 412 of the Code, or permit to exist any accumulated funding
deficiency, whether or not waived, with respect to any such Plan;
(iv) fail to make full payment when due of all amounts
which, under the provisions of any Multiemployer Plan or collective
bargaining agreement, the Company or any of its ERISA Affiliates is required
to pay as contributions thereto. The Company agrees (x) upon the request of
any Purchaser to obtain a current statement of withdrawal liability from each
Multiemployer Plan to which the Company or any of its ERISA Affiliates
contributes or to which the Company or any of its ERISA Affiliates has an
obligation to contribute and (y) to transmit a copy of such statement to each
Purchaser, so long as such Purchaser or such Purchaser's nominee shall be the
holder of any Notes, and to each other Significant Holder, within 15 days
after the Company receives the same;
(v) amend or permit an ERISA Affiliate to amend a Plan
resulting in an increase in current liability for the plan year such that
either the Company or an ERISA Affiliate is required to provide security to
such Plan under section 401(a)(29) of the Code; or
(vi) amend or permit an ERISA Affiliate to adopt or amend a
Welfare Plan resulting in an increase in current
-19-
liability in an amount that is material to the Company or such ERISA
Affiliate for the plan year.
8. SUBORDINATION OF THE NOTES. (a) Anything in this Agreement or the
Notes to the contrary notwithstanding, the indebtedness evidenced by the
Notes, including principal and interest and the Subordinated Liabilities,
shall be subordinate and junior in right of payment to the extent set forth
in clauses (i) through (vi) below to all Senior Obligations. Without
limiting the foregoing:
(i) The Purchasers and the holders of the Notes may not exercise any
right of offset in respect of obligations owing from the Company or any
Subsidiary Guarantor against obligations of the Company or Subsidiary
Guarantor hereunder.
(ii) In the event (A) of a default in the payment of principal of or
interest on any Senior Debt or (B) any Senior Debt is declared immediately
due and payable prior to its stated maturity, and the holders of the Notes
are given notice by the Company or any holder of Senior Debt of either such
event, then no payments may be made by the Company or any Subsidiary
Guarantor on the Subordinated Liabilities until such default is cured or such
declaration is rescinded. In addition, the holders of the Notes may not take
any action under paragraph 10 hereof or initiate any bankruptcy proceeding
with respect to the Company or any Subsidiary Guarantor until the earlier of
the date on which such default is cured, or such declaration is rescinded by
written notice by or on behalf of any holder of Senior Debt or 180 days after
the giving of such notice (in each case to the extent the holders of the
Notes are permitted to take such action under paragraph 10).
(iii) In the event (a) the Company defaults in the performance of
its obligations under any of Sections 9.01(a), 9.01(b), 9.01(c), 9.01(h),
9.01(1), 9.04(1), 9.04(6), 9.11, 9.13, 9.14 or 9.17 of the Credit Agreement
or there occurs an "event of default" (as defined in the Credit Agreement)
under any of Sections 10(b), 10(j), 10(k), 10(m) or 10(n) of the Credit
Agreement, and (b) upon receipt by the holders of the Notes of a certificate
from the Agent (as defined in the Credit Agreement) substantially in the form
attached hereto as Exhibit 8(a), then, unless and until such default shall
have been cured or waived or shall have ceased to exist, no payment may be
made by the Company or any Subsidiary Guarantor on any of the Subordinated
Liabilities during any period of 180 consecutive days after the occurrence of
such event and receipt of such certificate; provided that any Advisory Fee
payable hereunder during such 180-day period shall accrue during such 180-day
period and shall be
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payable together with the next succeeding semi-annual installment of the
Advisory Fee on the date such succeeding semi-annual installment is due; and
provided, further, that no more than one such certificate shall be given
pursuant to this clause (iii) in any period of 360 consecutive days. In
addition, the holders of the Notes may not take any action under paragraph 10
hereof, or initiate any bankruptcy proceeding with respect to the Company or
any Subsidiary Guarantor, during such period.
(iv) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceeding, or any receivership proceeding in
connection therewith, relative to the Company or any Subsidiary Guarantor,
then all principal of and interest on all Senior Obligations shall first be
paid in full in cash before any payment on account of principal or interest
is made by the Company or any Subsidiary Guarantor upon the Subordinated
Liabilities.
(v) In any of the proceedings referred to in clause (iv) above, any
payment or distribution of any kind or character, whether in cash, property,
stock or obligations, which may be payable or deliverable by the Company or
any Subsidiary Guarantor in respect of the Subordinated Liabilities shall be
paid or delivered directly to the holders of Senior Debt (or as designated by
any holder of Senior Debt) for application in payment thereof in accordance
with the priorities then existing among such holders, unless and until all
principal of and interest on all Senior Obligations shall have been paid in
full.
(vi) If any payment or distribution of any character, whether in
cash, securities or other property, shall be received by any holder of Notes
after such holder has received written notice from the Company or any holder
of Senior Debt correctly stating that such payment or distribution would be
in contravention of any of the terms of this paragraph 8, and before all the
Senior Debt shall have been paid in full, such payment or distribution shall
be received in trust for the benefit of the holders of the Senior Debt at the
time outstanding in accordance with the priorities then existing among such
holders, and shall be paid over or delivered and transferred to the holders
of the Senior Debt upon request.
(b) The holders of the Notes will prove, enforce and endeavor to obtain
payment of the Notes in any reorganization proceeding with respect to the
Company or any Subsidiary Guarantor. The holders of the Notes hereby
authorize and empower the Agent (as defined in the Credit Agreement) in any
reorganization proceeding with respect to the Company or any Subsidiary
Guarantor to (i) file a proof of claim on behalf of
-21-
the holders of the Notes if such holders fail to file proof of their claims
prior to twenty (20) days before the expiration of the time period during
which such claims must be submitted and (ii) vote claims and otherwise act in
such reorganization proceeding on behalf of the holders of the Notes if such
holders fail to vote their claims or otherwise act within five (5) Business
Days prior to the last date for voting or expressing their consent or
disapproval. Upon the failure of any holder of the Notes to file a proof of
claim, vote claims or otherwise act in a reorganization proceeding as
provided in this paragraph 8(b) {including within the time periods specified
herein), the Agent, on behalf of the holders of Senior Debt, is hereby
irrevocably authorized and empowered, in its sole and absolute discretion, to
make and present for and on behalf of such holder of the Notes such proof of
claims against the Company or any Subsidiary Guarantor on account of the
Subordinated Liabilities as the holders of the Senior Debt may have deemed
expedient or proper and to vote such proofs of claims in any such proceeding.
(c) The provisions of this paragraph 8 are for the purpose of defining
the relative rights of the holders of Senior Debt, on the one hand, and the
holders of the Notes, on the other hand, against the Company and its
property, and nothing herein shall impair, as between the Company and the
holders of the Notes, the obligation of the Company, which is unconditional
and absolute, to pay to the holders of the Notes the principal thereof and
interest thereon in accordance with their terms and the provisions hereof and
the other obligations under this Agreement, nor, except for the provisions of
clause (i) above relating to the taking of action under paragraph 10, shall
anything herein prevent the holders of the Notes from exercising all remedies
otherwise permitted by applicable law or hereunder upon default hereunder or
under the Notes. Upon payment in full of the Senior Obligations, the holders
of the Notes shall be subrogated to the rights of the holders of the Senior
Debt to receive payments or distributions of assets of the Company made on
the Senior Obligations until the principal of and interest on the Notes and
the other obligations under this Agreement shall be paid in full, and, for
the purposes of such subrogation, no payments to the holders of Senior Debt
of any cash, property, stock or obligations to which the holders of the Notes
would be entitled shall, as between the Company, its respective creditors
(other than the holders of the Senior Debt) and the holders of the Notes, be
deemed to be a payment by the Company to or on account of the Senior
Obligations.
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9. INDEMNIFICATION.
9A. INDEMNIFICATION BY COMPANY. The Company agrees to indemnify,
defend, and hold the Purchasers harmless from and against all claims,
demands, losses, liabilities or judgments, including, without limitation, all
interest, penalties, fines and other sanctions, and any reasonable costs or
expenses in connection therewith, including, without limitation, attorneys'
fees and expenses, arising out of or in connection with the breach by the
Company or any of its Subsidiaries of any of the representations and
warranties set forth herein or failure by the Company or its Subsidiaries to
observe, pay or perform any of its or their respective covenants or
agreements set forth herein.
9B. INDEMNIFICATION BY PURCHASERS. The Purchasers hereby agree to
indemnify, defend, and hold the Company harmless from and against all claims,
demands, losses, liabilities or judgments, including, without limitation, all
interest, penalties, fines and other sanctions, and any reasonable costs or
expenses in connection therewith, including, without limitation, attorneys'
fees and expenses, arising out of or in connection with the breach or failure
by the Purchasers to observe, pay or perform any of the warranties,
representations, covenants or agreements set forth herein.
9C. PROCEDURES UNDER INDEMNIFICATION. In the event that any legal
proceedings shall be instituted or that any claim or demand shall be asserted
by any person in respect of which payment may be sought by either party from
the other party under the provisions of this paragraph 9, the party seeking
indemnification (the "Indemnitee") shall promptly cause written notice of the
assertion of any claim of which it has knowledge and which is covered by this
paragraph 9 to be forwarded to the party from which indemnification is sought
(the "Indemnitor"). The Indemnitor shall have the right, at its option and at
its expense, to be represented by counsel of its choice and to participate
in, or to take exclusive control of, the defense, negotiation and/or
settlement of any proceeding, claim or demand which relates to any losses or
potential losses indemnified against hereunder; provided, however, that (i)
such participation by the Indemnitor shall not be deemed to be an admission
of its liability to the Indemnitee or any other claimant and (ii) the
Indemnitee may participate in any such proceeding with counsel of its choice
and at its own expense. To the extent that the Indemnitor elects not to
defend or settle such proceeding, claim or demand, the Indemnitee may in
accordance with its good faith business judgment elect reasonably to defend
against, settle or otherwise deal with any such proceeding, claim or demand;
provided, however, that any such settlement shall be made only
-23-
with the consent of the Indemnitor (which consent shall not be unreasonably
withheld or delayed, and shall be deemed given by the Indemnitor unless the
Indemnitor shall notify the Indemnitee of its objection to such settlement
and the reasons for such objection by notice given within ten (10) days after
such consent shall be requested by the Indemnitee). The parties agree to
cooperate fully with each other in connection with the defense, negotiation
or settlement of any such legal proceeding, claim or demand. After any final
judgment or award shall have been rendered by a court, arbitration board or
administrative agency of competent jurisdiction and the time in which to
appeal such final judgment or award shall have expired, or a settlement shall
have been consummated, or the Indemnitee and the Indemnitor shall have
arrived at a mutually binding agreement with respect to each separate matter
indemnified by the Indemnitor, the Indemnitee shall forward to the Indemnitor
notice of any sums due and owing by the Indemnitor with respect to such
matter and the Indemnitor shall be required to pay all of such sums owing by
reason of such judgment, award or settlement to the Indemnitee by wire
transfer in immediately available funds within thirty (30) days after the
date of such notice. If defendants in any action include both the Indemnitor
and the Indemnitee, and the Indemnitee shall have been advised by its counsel
that there may be legal defenses available to the Indemnitee which are
different from or additional to those available to the Indemnitor, the
Indemnitee shall have the right to employ its own counsel in such action, and
in such event, the fees and expenses of such counsel shall be borne by the
Indemnitor.
10. EVENTS OF DEFAULT.
10A. DEFAULT: ACCELERATION. If any of the following events shall occur
and be continuing for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation
of law or otherwise):
(i) the Company defaults in the payment of any principal on any Note
at its maturity or when otherwise due, or in the payment of any purchase or
redemption obligation, or in the payment of interest on any Note when the
same shall become due, either by the terms thereof or otherwise as provided
herein, and such default shall continue for three (3) or more Business Days
after the same shall have become due; or
(ii) the Company or any of its Subsidiaries fails to perform or
observe any of the financial covenants in paragraph 7A hereof, and such
default shall continue unremedied for a period of thirty (30) or more
Business Days after written notice thereof to the Company and, for so long as
the Senior Debt
-24-
is outstanding, the Agent (as defined in the Credit Agreement), which written
notice shall provide in reasonable detail the calculations relating to such
financial covenants; or
(iii) the Company or any of its Subsidiaries defaults in any payment
of principal of or interest on any Debt in an amount in excess of $250,000
beyond any period of grace provided with respect thereto and the effect of
such failure is to cause such Debt to become due prior to any stated
maturity; or
(iv) any representation or warranty made in writing by or on behalf
of the Company in this Agreement or in any writing furnished in connection
with or pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement shall be false in any material respect on the
date as of which made; or
(v) the Company fails to perform or observe any provision contained
in clause (ix) of paragraph 6A, in paragraphs 6C or 6H(i), or in paragraphs
7B through 7L hereof, and such default shall continue unremedied for a period
of thirty (30) or more Business Days after notice thereof to the Company; or
(vi) repudiation by any Subsidiary of the Company of its obligations
under a Subsidiary Guarantee or a final judicial determination that a
Subsidiary Guarantee is not enforceable against any Subsidiary Guarantor in
accordance with its terms; or
(vii) the Company fails to perform or observe any other material
agreement, term or condition contained in this Agreement, and such failure
shall not have been remedied within 30 days after such failure shall first
have become known to any Responsible Officer of the Company or written notice
thereof shall have been received by the Company (regardless of the source of
such notice); or
(viii) any judgment, order or decree for relief in respect of the
Company or any of its Subsidiaries is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or similar law, whether now or hereafter in effect
(herein called the "Bankruptcy Law"), of any jurisdiction; or
(ix) the Company or any of its Subsidiaries, within the meaning of
any Bankruptcy Law: (A) commences a voluntary case or proceeding; (B)
consents to the entry of a judgment, decree or order for relief against it in
an involuntary case or proceeding; (C) consents to the appointment of a
-25-
receiver, trustee, custodian, liquidator or similar official for it or for
all or substantially all of its property or assets; (D) consents to or
acquiesces in the institution of a bankruptcy or insolvency proceeding
against it; (E) makes an assignment for the benefit of its creditors or is
generally not paying its debts as they become due; (F) takes any corporate
action to authorize or effect any of the foregoing; (G) is the subject of any
judgment, decree or order entered in any proceeding (1) approving a petition
seeking reorganization, arrangement, adjustment or composition, (2)
appointing a receiver, trustee, custodian, liquidator or similar official for
it or for all or substantially all of its property or assets or (3) ordering
its winding-up, dissolution or liquidation, and in each case the judgment,
decree or order remains unstayed and in effect for 30 days; or
(x) a final judgment (excluding a judgment in a matter listed on
Schedule 11D hereto) in an amount not fully covered by insurance in excess of
$100,000 is rendered against the Company or any of its Subsidiaries and,
within 30 Business Days after entry thereof, such judgment is not discharged
or execution thereof stayed pending appeal, or within 10 days after the
expiration of any such stay, such judgment is not discharged;
then (a) if such event is an Event of Default specified in clause (viii) or
(ix) of this paragraph 10A, all of the Notes at the time outstanding shall
automatically become due and payable at par, together with interest accrued
thereon; (b) if such event is any ether Event of Default, a Significant
Holder of the Notes may, at its option, by notice in writing to the Company,
declare all of the Notes to be, and all of the Notes shall thereupon be and
become, immediately due and payable at par, together with interest accrued
thereon, in each of the cases referred to in clauses (a) and (b) above,
without presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Company; (c) the Notes will have
preference in right of payment to all other subordinated debt of the Company
and to any Capital Stock of the Company in the event of any event specified
in clause (viii) or (ix) of this paragraph 10A; and (d) if such event is an
Event of Default specified in clause (i) of this paragraph 10A, the Company
will promptly issue to the Purchasers Penalty Warrants in accordance with the
provisions of paragraph 16D hereof.
10B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes shall have been declared immediately due and payable pursuant to
paragraph 10A hereof, the Significant Holder may, by notice in writing to the
Company, rescind and annul such declaration and its consequences if (i) the
Company shall have paid all overdue interest on the Notes, any principal
payable
-26-
with respect to Notes which have become due otherwise than by reason of such
declaration, and interest on such overdue interest and overdue principal at
the rate specified in the Notes, (ii) the Company shall not have paid any
amounts which have become due solely by reason of such declaration, (iii) all
Defaults and Events of Default, other than non-payment of amounts which have
become due solely by reason of such declaration, shall have been cured or
waived pursuant to paragraph 17C hereof, and (iv) no judgment or decree shall
have been entered for the payment of any amounts due pursuant to the Notes or
this Agreement. No such rescission or annulment shall extend to or affect
any subsequent Default or Event of Default or impair any right arising
therefrom.
10C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall he
declared immediately due and payable pursuant to paragraph 10A hereof, or any
such declaration shall be rescinded and annulled pursuant to paragraph 10B
hereof, written notice shall forthwith be given thereof by the Significant
Holder of the Notes to the holder of each Note at the time outstanding. In
addition, whenever any Note shall be declared immediately due and payable
pursuant to paragraph 10A hereof, the Significant Holder of the Notes shall
give written notice thereof to the Agent (as defined in the Credit Agreement)
not less than five (5) Business Days before any such Note becomes due and
payable.
10D. OTHER REMEDIES. Subject to the provisions of paragraph 8(i) hereof,
if any Default or Event of Default shall occur and be continuing, the holder
of any Note may proceed to protect and enforce its rights under this
Agreement and such Note by exercising such remedies as are available to such
holder in respect thereof under applicable law, either by suit in equity or
by action at law, or both, whether for specific performance of any covenant
or other agreement contained in this Agreement or in aid of the exercise of
any power granted in this Agreement. No remedy conferred in this Agreement
upon the holder of any Note is intended to be exclusive of any other remedy,
and each and every such remedy shall be cumulative and shall be in addition
to every other remedy conferred herein or now or hereafter existing at law or
in equity or by statute or otherwise.
11. REPRESENTATIONS BY THE COMPANY. The Company hereby represents,
covenants and warrants to the Purchasers as follows:
11A. ORGANIZATION; CORPORATE AUTHORITY. The Company and each of its
Subsidiaries, is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and
-27-
has all requisite corporate or other power and authority to own and operate
its properties and to carry on its business. The Company and each of its
Subsidiaries has all requisite corporate or other power and authority to
enter into and perform all of its obligations under this Agreement and to
issue and sell the Notes and Warrants as contemplated hereby. The Company
and each of its Subsidiaries is duly qualified and in good standing and duly
authorized to do business in each jurisdiction where it is or will be on the
Closing Date required so to qualify, except where the failure so to qualify
would not have a material adverse effect on its business, condition
(financial or otherwise), prospects, assets or properties.
11B. BUSINESS: FINANCIAL STATEMENTS. The Company has furnished the
Purchasers with the following financial statements: (i) the audited balance
sheets of the Company at December 31, 1993 and December 31, 1992 and the
related audited statements of operations, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1993, all
reported on by Price Waterhouse, and (ii) the unaudited balance sheet of the
Company at August 31, 1994 and the related unaudited statement of operations,
stockholders' equity and cash flow for the period ended on such date
(collectively, the "Disclosure Documents"). The Disclosure Documents (i)
have been prepared in conformity with GAAP applied on a consistent basis and
disclose all liabilities, direct and contingent, required to be shown in
accordance with such principles and (ii) present fairly the financial
position of the Company at the dates indicated and results of operations for
the periods indicated. The Disclosure Documents did not, as of their
respective dates, and this Agreement does not, contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements therein and herein, in light of the circumstances under which
they were made, not misleading. There is no fact (other than facts related
to general economic conditions) peculiar to the Company which materially
adversely affects or in the future would reasonably be expected to materially
adversely affect the business, prospects, condition (financial or otherwise)
or operations of the Company which has not been set forth or reflected in
this Agreement or the Disclosure Documents. The Company has not sustained
since August 31, 1994 any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree which
is material to the Company, other than as set forth in the Disclosure
Documents. Since August 31, 1994, there has not been any material change in
the Capital Stock or long-term or short-term Debt of the Company or in the
capitalization of the Company (other than the changes resulting from the
transactions
-28-
contemplated by this Agreement and the Related Agreements) or any material
adverse change, or any development which the Company has reasonable cause to
believe will involve a prospective material adverse change, in or affecting
the business, condition (financial or otherwise), assets, properties,
operations or prospects of the Company.
11C. CAPITAL STOCK AND RELATED MATTERS. As of the Closing Date (or other
indicated date) and after giving effect to the transactions contemplated
hereby the authorized Capital Stock of the Company is as set forth in
Schedule 11C attached hereto. Except as set forth in Schedule 11C, the
Company has not granted or agreed to grant any rights relating to the
registration of its securities under applicable federal and state securities
laws, including piggyback rights.
11D. LITIGATION. Except as set forth in Schedule 11D attached hereto,
there are no claims, actions, suits, proceedings, labor disputes or
investigations in process by or against the Company or any of its
Subsidiaries or, to the best knowledge of the Company, threatened either by a
written communication directed to the Company or by an oral communication
directed to the Company by a stockholder of the Company, before any federal
or state court, arbitrator or governmental authority by or against the
Company which, if adversely determined, may reasonably be expected to result
in any material adverse change in the business, condition (financial or
otherwise), assets, properties, operations or prospects of the Company or in
any liability on the part of the Company which would be material to the
Company or which, to the best knowledge of the Company, includes a claim
against or involving the Company in excess of $100,000 or which questions the
validity or legality of or seeks damages in connection with this Agreement or
any action taken or to be taken pursuant to this Agreement. There are no
outstanding judgments, decrees or orders of any court or governmental
authority against the Company which may reasonably be expected to result in
any material adverse change in the business, condition (financial or
otherwise), assets, properties, operations or prospects of the Company or in
any liability on the part of the Company which would be material to the
Company.
11E. OUTSTANDING DEBT. Except as set forth in Schedule 11E attached
hereto, the Company does not, and each of its Subsidiaries do not, have any
outstanding secured or unsecured Debt or commitments for any Debt, other than
the Senior Debt and Debt permitted by paragraph 7B hereof, and as of the
Closing Date there will exist no default or event of default by the Company
or any of its Subsidiaries under the provisions of any instrument evidencing
such Debt or of any agreement relating thereto that
-29-
has or would be expected to have a material adverse effect on the Company or
any of its Subsidiaries.
11F. TITLE TO PROPERTIES. The Company and each of its Subsidiaries has
good and marketable title to all of its respective properties and assets,
free and clear of all Liens other than Liens permitted by paragraph 7D
hereof. The Company and each of its Subsidiaries enjoys peaceful and
undisturbed possession under all leases necessary in any material respect for
the operation of its properties and businesses; and none of such leases
contain any unusual or burdensome provisions which might materially affect or
impair the operation of such properties and businesses. Except to perfect
and protect security interests of the character permitted by paragraph 7D
hereof, at the time of the Closing (i) no effective financing statement under
the Uniform Commercial Code which names the Company or any of its
Subsidiaries as debtor or lessee will be on file in any jurisdiction and (ii)
the Company and each of its Subsidiaries will not have signed any effective
financing statement or any effective security agreement authorizing any
secured party thereunder to file any such financing statement.
11G. TAXES. The Company has filed all tax returns required by law to be
filed by it (or obtained valid extensions thereof), and all taxes,
assessments and other governmental charges levied upon the Company or any of
its properties, assets, income or franchises which are due and payable, other
than those presently payable without penalty or interest, have been paid.
There are no tax liens upon any assets of the Company.
11H. CONFLICTING AGREEMENTS AND OTHER MATTERS. The Company and each of
its Subsidiaries is not a party to any contract or agreement or subject to
any restriction which materially and adversely affects its business,
condition (financial or otherwise), prospects, assets or properties. Neither
the execution or delivery of this Agreement or the Notes or the Warrants, nor
the offering, issuance and sale of the Notes or the Warrants, nor fulfillment
of or any compliance with the terms and provisions hereof and thereof, will
conflict with, or result in a breach of the terms, conditions or provisions
of, or constitute a default under, or result in any violation of, or result
in the creation of any Lien upon any of the properties or assets of the
Company pursuant to, the Articles of Incorporation or Code of Regulations of
the Company, any award of any arbitrator or any material agreement,
instrument, order, judgment, decree, statute, law, rule or regulation to
which the Company, or any of its respective property or assets is subject.
The Company is not a party to or otherwise subject to any contract or
agreement which limits the amounts of, or otherwise
-30-
imposes restrictions on the incurring of, Debt of the type to be evidenced by
the Notes or which contains dividend or redemption limitations on any Capital
Stock of the Company, except for this Agreement and as set forth in Schedule
11H attached hereto.
11I. PATENTS, ETC. All patents, trademarks, service-marks, trade names,
permits, licenses, franchises or other rights (including industry
certificates and approvals and including, without limitation, FAA
Supplemental Type Certificate ("STC") approvals) (collectively, "Intangible
Rights") owned or held by the Company or any of its Subsidiaries that are
material to the business of the Company or any of its Subsidiaries are
described on Schedule 11I attached hereto. Except as described on Schedule
11I, all such Intangible Rights are free and clear of any Lien. Nothing has
come to the attention of the Company to the effect that (i) any activity in
operating the business of the Company or any of its Subsidiaries as presently
conducted or as proposed to be conducted may infringe any patent, trademark,
service-xxxx, trade name, copyright, permit, license, franchise or other
right owned by any other Person, (ii) there is pending or threatened any
claim or litigation against or affecting the Company or any of its
Subsidiaries contesting its right to carry on such activities or (iii) there
is, or there is pending or proposed, any statute, law, rule, regulation,
standard or code which would prevent or inhibit, or substantially reduce the
projected revenues of, or otherwise adversely affect the business, condition
(financial or otherwise), or operations of, the Company.
11J. OFFERING OF SECURITIES. Except as set forth in Schedule 11J
attached hereto, the Company, has not, directly or indirectly, offered any of
the Notes or the Warrants or any similar security of the Company, including,
without limitation, Common Stock, for sale to, or solicited any offers to buy
any such security of the Company from, or otherwise approached or negotiated
with respect thereto with, any Person or Persons other than the Purchasers
and no more than 10 other investors; and neither the Company nor any agent
acting on its behalf has taken or will take any action which would subject
the issuance or sale of any of the Notes to the provisions of section 5 of
the Securities Act or to the provisions of any securities or Blue Sky law of
any applicable jurisdiction.
11K. BROKER'S OR FINDER'S COMMISSIONS. Except for a fee in the amount of
$650,000 (plus expenses totaling not more than $155,000) payable to Alex.
Xxxxx & Sons Incorporated, no broker's or finder's fee or commission will be
payable by the Company with respect to the issuance and sale of the Notes or
the Warrants or the transactions contemplated hereby.
-31-
11L. COMPLIANCE WITH LAW. (a) The Company has not received notice of, or
citation or summons for, and no complaint has been filed, no penalty has been
assessed and no investigation or review is in process or, to the best
knowledge of the Company, threatened by any governmental authority with
respect to, any violation or alleged violation of any law, regulation, order
or other legal requirement, or failure by the Company to have any permit,
certificate, license, approval, registration or authorization (including
industry certificates and approvals and including, without limitation, STCs)
required in connection with the operation of its business, other than where
such violation or failure would not reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), assets,
properties, operations or prospects of the Company. The Company is not in
default with respect to any order, writ, judgment, award, injunction or
decree of any federal, state or local court or governmental or regulatory
authority or arbitrator, domestic or foreign, applicable to or in connection
with its business or any of its assets, properties or operations, other than
defaults the consequences of which would not reasonably be expected to have a
material adverse effect on the business, condition (financial or otherwise),
assets, properties, operations or prospects of the Company.
(b) With respect to the operation of its business, the Company
possesses and is in compliance with all material permits, certificates,
licenses, approvals, registrations and authorizations (including industry
certificates and approvals and including, without limitation, STCs) required
under all applicable laws, rules and regulations, all of which are in full
force and effect, and the business has been conducted and is now being
conducted in compliance with all applicable laws, rules, regulations,
judgments and orders of the United States and states, counties,
municipalities and agencies thereof, including, without limitation, laws,
rules and regulations relating to pollution and environmental control, equal
employment opportunity, health and safety and zoning, except for such
noncompliance which, individually or in the aggregate, would not reasonably
be expected to have a material adverse effect on the business, condition
(financial or otherwise), assets, properties, operations or prospects of the
Company.
11M. INVESTMENT COMPANY ACT. The Company is not an "investment company,"
or a company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
11N. PUBLIC UTILITY HOLDING COMPANY ACT. The Company is not a "holding
company," or a "subsidiary company" of a
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"holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
11O. FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT. The Company is not a
"United States real property holding corporation," as defined in section 897
of the Code and applicable regulations thereunder.
11P. GOVERNMENTAL CONSENTS, ETC. No consent, approval, authorization,
exemption or other action by, or notice to or filing with, any court or
administrative or governmental body (or modification to any of the foregoing)
which has not been obtained, taken or made is required in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or thereby or fulfillment of or compliance
with the terms and provisions hereof.
11Q. COMPLIANCE WITH ERISA. (a) PROHIBITED TRANSACTIONS. Neither the
Company nor any ERISA Affiliate has engaged in a transaction in connection
with which the Company could be subject to a material liability for either a
civil penalty assessed pursuant to section 502(i) or (1) of ERISA or a tax
imposed by section 4975 of the Code.
(b) PLAN TERMINATION; MATERIAL LIABILITIES. There has been no
termination or partial termination of a Plan or trust, insurance contract or
other funding arrangement maintained or created under any Plan, and there has
been no withdrawal or partial withdrawal from a Multiemployer Plan, that
would give rise to a material liability to the PBGC, or to a Multiemployer
Plan, on the part of the Company or an ERISA Affiliate. No material
liability to the PBGC has been or is expected to be incurred with respect to
any Plan by the Company or an ERISA Affiliate. The PBGC has not instituted
proceedings to terminate any Plan with respect to which the Company or an
ERISA Affiliate has liabilities. There exists no condition or set of
circumstances which presents a material risk of termination or partial
termination of any Plan by the PBGC. The Company and each ERISA Affiliate
have paid all premiums to the PBGC when due. No condition exists or event or
transaction has occurred in connection with any Plan or Multiemployer Plan or
Welfare Plan which has resulted and/or will result in the incurrence by the
Company or any ERISA Affiliate of any material liability, fine, penalty or
tax.
(c) ACCUMULATED FUNDING DEFICIENCY. Full payment has been made of
all amounts which are required under the terms
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of each Plan to have been paid or accrued as contributions to such Plan as of
the last day of the most recent fiscal year of such Plan ended on or before
the date of this Agreement (except such contributions as have not been made
but that can be timely made at a later date without penalty in accordance
with sections 412 and 4971 of the Code), and no accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, exists with respect to any Plan. Neither the Company
nor an ERISA Affiliate has failed to make a required installment under
section 412(m) of the Code.
(d) RELATIONSHIP OF BENEFITS TO PENSION PLAN ASSETS. The current
value of the "benefit liabilities" (as defined in section 4001(a)(16) of
ERISA) of each Plan subject to Title IV of ERISA and section 412 of the Code
does not exceed the fair market value of the assets of such Plan. Neither
the Company nor any ERISA Affiliate is required to provide security to any
Plan. No Lien under section 412(n) of the Code or sections 312(f) or 4068 of
ERISA has been or is reasonably expected by the Company to be imposed on the
assets of the Company or any ERISA Affiliate. The Company and the ERISA
Affiliates may cease contributions to or terminate any Plan or Welfare Plan
without incurring any material liability.
(e) COMPLIANCE WITH ERISA. All Plans which are intended to be
"qualified" are "qualified" under section 401(a) of the Code and will have
been submitted to the Internal Revenue Service by the end of the current plan
year for a determination letter confirming such qualification. All Plans and
Welfare Plans contributed to or maintained by the Company or an ERISA
Affiliate have been administered substantially in compliance with ERISA and
the applicable provisions of the Code. There are no pending issues before
the Internal Revenue Service or any court of competent jurisdiction related
to the qualification of, or payment of benefits under, any Plan or Welfare
Plan.
(f) EXECUTION OF AGREEMENTS; PURCHASE AND SALE OF SECURITIES, ETC. The
execution and delivery of this Agreement the issue and sale of the Notes and
the Warrants and the consummation of the transactions contemplated by this
Agreement will not involve any transaction which is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975 of the Code. The representation by the
Company in the preceding sentence is made in reliance upon and subject to the
accuracy of the Purchasers' representations in paragraph 12C hereof as to the
source of funds used to pay the purchase price of the Notes and the Warrants.
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11R. EMPLOYEE MATTERS. Except as set forth in Schedule 11R attached
hereto, (a) there are no open National Labor Relations Board claims,
petitions, proceedings, charges, complaints or notices with respect to the
Company, (b) the Company has no labor negotiations in process with any labor
union or other labor organization, (c) no labor disputes, including, but not
limited to, strikes, slowdowns, picketing or work stoppages or other labor
difficulty exist or to the best of the Company's knowledge are threatened,
with respect to any employees of the Company, (d) no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement
relating to the employees of the Company is in process, and to the best
knowledge of the Company, no claim thereunder exists, (e) the Company is not
experiencing any labor disputes, including but not limited to strikes,
slowdowns, picketing or work stoppages with respect to the employees of the
Company and (f) no "plant closing" or "mass layoff" has been effectuated by
the Company (in each case as defined in the Worker Adjustment and Retraining
Notification Act (29 U.S.C. Section 2101, ET SEQ.), as amended). To the best
knowledge of the Company, there are no efforts in process by unions to
organize any employees of the Company who are not now represented by
recognized collective bargaining agents.
11S. MATERIAL AGREEMENTS. The agreements, contracts and other documents
listed in Schedule 11S attached hereto comprise all of the material
agreements, contracts and other arrangements to which the Company is a party
(including, without limitation, contracts or other agreements for the
employment or compensation of any officer, director, stockholder, consultant
or key employee of the Company, joint venture agreements, shareholder
agreements or similar arrangements).
11T. ENVIRONMENTAL MATTERS. The Company and each of its Subsidiaries has
obtained all environmental, health and safety permits, licenses and other
authorizations required under all Environmental Laws to carry on its business
as now being or as proposed to be conducted, except to the extent failure to
have any such permit, license or authorization would not (either individually
or in the aggregate) have a material adverse effect on the condition
(financial or otherwise), assets, properties, operations or prospects of the
Company or any of its Subsidiaries (for purposes of this paragraph 11T, a
"Material Adverse Effect"). Each of such permits, licenses and
authorizations is in full force and effect and the Company and each of its
Subsidiaries is in compliance with the terms and conditions thereof, and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable
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Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply therewith would not
(either individually or in the aggregate) have a Material Adverse Effect.
In addition, except as set forth on Schedule 11T attached hereto:
(a) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged failure by the
Company or any of its Subsidiaries to have any environmental, health or
safety permit, license or other authorization required under any
Environmental Law in connection with the conduct of the business of the
Company or any of its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, discharge or disposal, or any
Release of any Hazardous Materials generated by the Company or any of its
Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries owns, operates or
leases a treatment, storage or disposal facility requiring a permit under the
Resource Conservation and Recovery Act of 1976, as amended, or under any
comparable state or local statute; and
(i) no polychlorinated biphenyls (PCB's) is or has been present at
any site or facility now or previously owned, operated or leased by the
Company or any of its Subsidiaries;
(ii) no asbestos or asbestos-containing materials is or has been
present at any site or facility now or previously owned, operated or
leased by the Company or any of its Subsidiaries;
(iii) there are no underground storage tanks or surface
impoundments for Hazardous Materials, active or abandoned, at any site or
facility now or previously owned, operated or leased by the Company or any
of its Subsidiaries;
(iv) no Hazardous Materials have been Released at, on or under any
site or facility now or previously owned, operated or leased by the
Company or any of its Subsidiaries in a reportable quantity
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established by statute, ordinance, rule, regulation or order; and
(v) no Hazardous Materials have been otherwise Released at, on or
under any site or facility now or previously owned, operated or leased by
the Company or any of its Subsidiaries,
in each case, that would (either individually or in the aggregate) have a
Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries has transported or
arranged for the transportation of any Hazardous Material to any location
that is listed on the National Priorities List ("NPL") under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), listed for possible inclusion on the NPL by the
Environmental Protection Agency in the Comprehensive Environmental Response
and Liability Information System, as provided for by 40 C.F.R. Section 300.5
("CERCLIS"), or on any similar state or local list or that is the subject of
Federal, state or local enforcement actions or other investigations that may
lead to environmental liability against any Company or any of its
Subsidiaries.
(d) No Hazardous Material generated by the Company or any of its
Subsidiaries has been recycled, treated, stored disposed of or Released by
the Company or any of its Subsidiaries at any location other than those
listed in Schedule 11T.
(e) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Company or any of its
Subsidiaries and no site or facility now or previously owned, operated or
leased by any Company and each of its Subsidiaries is listed or proposed for
listing on the NPL, CERCLIS or any similar state list of sites requiring
investigation or clean-up.
(f) No Liens have arisen under or pursuant to any Environmental Laws on
any site or facility owned, operated or leased by the Company or any of its
Subsidiaries, and no government action has been taken or is in process that
could subject any such site or facility to such Liens and none of the Company
or any of its Subsidiaries would be required to place any notice or
restriction relating to the presence of Hazardous Materials at any site or
facility owned by it in any deed to the real property on which such site or
facility is located.
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(g) All environmental investigations, studies, audits, tests, reviews
or other analyses conducted by or that are in the possession of the Company
or any of its Subsidiaries in relation to facts, circumstances or conditions
at or affecting any site or facility now or previously owned, operated or
leased by the Company or any of its Subsidiaries and that could result in a
Material Adverse Effect have been made available to the Purchasers.
11U. PRODUCTS LIABILITY. Except for lawsuits, claims (asserted or
unasserted), damages and expenses adequately covered by the Company's
insurance, there are no (i) liabilities of the Company, fixed or contingent,
asserted or, to the best knowledge of the Company, unasserted, with respect
to any product liability or any similar claim that relates to any product
sold by the Company to others prior to the Closing Date, or (ii) liabilities
of the Company, fixed or contingent, asserted or, to the best knowledge of
the Company, unasserted, with respect to any claim for the breach of any
express or implied product warranty or any other similar claim with respect
to any product sold by the Company to others prior to the Closing Date, other
than standard warranty obligations (to replace, repair or refund) made by the
Company in the ordinary course of the conduct of its business to purchasers
of its products, and except, in each case, where such liabilities do not or
would not reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), assets, properties, operations
or prospects of the Company.
11V. SOLVENCY. As of and at the Closing, both immediately prior to and
following the consummation of the transactions contemplated by this
Agreement, the Related Agreements and the Credit Agreement, the Company, each
Subsidiary Guarantor and each other Subsidiary of the Company:
(a) is able to pay its debts as they become due;
(b) owns property whose fair saleable value is greater than the amount
required to pay its debts (including a reasonable estimate of the amount of
all contingent liabilities);
(c) has adequate capital to carry on its business, and has capital
which is not unreasonably small for the businesses in which it is engaged or
proposes to engage; and
(d) is making no transfer of property and is incurring no obligation
in connection with the transactions contemplated by this Agreement, the
Related Agreements and the
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Credit Agreement, with the intent to hinder, delay or defraud any of the
present or future creditors of such company.
12. REPRESENTATIONS BY PURCHASERS. The Purchasers hereby represent,
covenant and warrant to the Company as follows:
12A. ORGANIZATION, AUTHORIZATION, ETC. The Purchasers are duly
organized, validly existing and in good standing under the laws of their
respective jurisdiction of organization, having the corporate power and
authority to execute, deliver and perform this Agreement and have taken all
action required by law, the Purchasers' governing documents or otherwise to
authorize such execution, delivery and performance. Such execution and
delivery do not, and the consummation of the transactions contemplated hereby
will not, violate any provision of the Purchasers' governing documents or any
provision of any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree to which the Purchasers are a party or
by which the Purchasers are bound, and this Agreement is a valid and binding
obligation of the Purchasers enforceable in accordance with its terms.
12B. PURCHASE FOR INVESTMENT. The Securities to be acquired hereunder
and any shares of Common Stock issuable upon the exercise thereof will be
acquired by the Purchasers for investment for the Purchasers' own accounts
and not with a view to the resale or distribution of any part thereof within
the meaning of the Securities Act. Upon the issuance of the Common Stock
issuable upon exercise of the Warrants, the Purchasers will represent to the
Company that the Purchasers have acquired such shares for investment for the
Purchasers' own accounts and not with a view to the resale or distribution of
any part thereof within the meaning of the Securities Act.
12C. SOURCE OF FUNDS. The source of funds is not an employee benefit
plan, as defined in Section 3(3) of ERISA.
13. DEFINITIONS. For the purposes of this Agreement, the following
terms shall have the meanings specified below with respect thereto:
"ADDITIONAL WARRANTS" shall mean the warrants issued under (a) the
Common Stock Purchase Warrant, dated as of the date hereof, of the Company in
favor of Internationale Nederlanden (U.S.) Capital Corporation, (b) the
Common Stock Purchase Warrant, dated as of the date hereof, of the Company in
favor of The Provident Bank, and (c) the Senior Subordinate Loan and Warrant
Purchase Agreement, dated October 15, 1991, as amended,
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among Banc One Capital Partners Corporation, the Company and certain of its
Subsidiaries.
"ADVISORY AGREEMENT" shall mean that certain Advisory Agreement, dated
as of the date hereof, between the Company and Electra.
"ADVISORY FEE" shall have the meaning specified in paragraph 15.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with, such Person. The term Affiliate shall include, without
limitation, (i) any director or executive officer of such Person or of an
Affiliate of such Person, (ii) a parent, spouse or child (a "relative") of
such director or executive officer, (iii) any group, acting in concert, of
such director, executive officer or relative (a "group"), (iv) any Person
controlled by any such director, executive officer, relative or group, and
(v) any Person or group which beneficially owns or holds 5% or more of any
class of voting securities or a 5% or greater equity or profits interest in
such Person. The term Affiliate shall not include (a) the Purchasers and any
Transferee that might be deemed to be an Affiliate solely by reason of its
ownership of the Securities (or any other securities issued in exchange for
any such Securities) or by reason of its benefiting from any agreements or
covenants of the Company or its Subsidiaries contained in or contemplated by
this Agreement or (b) with respect to the Company and its Subsidiaries, Xxxxx
Xxxxxxx. The term control (including, with correlative meanings,
controlling, controlled by or under common control with) shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or by contract or otherwise.
"AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT" shall mean that
certain Second Amended and Restated Registration Rights Agreement, dated as
of the date hereof, between the Company, the Purchasers and each other Person
to which the Company has granted registration rights for any of its
securities.
"AMENDED AND RESTATED STOCKHOLDERS AGREEMENT" shall mean that certain
Second Amended and Restated Stockholders Agreement, dated as of the date
hereof, between the Company, the Purchasers and certain other shareholders of
the Company.
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"ASSOCIATES" shall have the meaning specified in the first paragraph
hereof.
"BANC ONE WARRANT" shall mean the warrants issued under the Senior
Subordinate Loan and Warrant Purchase Agreement, dated October 15, 1991, as
amended, among Banc One Capital Partners Corporation, the Company and certain
of its Subsidiaries.
"BANKRUPTCY LAW" shall have the meaning specified in clause (viii) of
paragraph 10A.
"BUSINESS DAY" shall mean any day which is not a Saturday or a Sunday or
a day on which commercial banks in New York City are required or authorized
to be closed.
"CAPITAL EXPENDITURES" shall mean, for any period, expenditures
(including, without limitation, the aggregate amount of liabilities under
Capitalized Leases incurred during such period) made by the Company or any of
its Subsidiaries to acquire or construct fixed assets, plant and equipment
(including renewals, improvements and replacements, but excluding repairs)
during such period computed in accordance with GAAP.
"CAPITAL STOCK" shall mean any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock.
"CAPITALIZED LEASE" shall mean any lease obligation which, under GAAP,
is or will be required to be capitalized on the books of the Company or its
Subsidiaries.
"CASH EQUIVALENTS" shall mean (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit or eurodollar time deposits having maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500 million
and a Xxxxx Bank Watch Rating of "B" or better, (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the
types described in clauses (ii) and (iii) entered into with any financial
institution meeting the qualifications described in clause (iii) above, and
(v) commercial paper of any Person that is not a Subsidiary or an Affiliate
of the Company, having the highest rating obtainable from Xxxxx'x Investors
Service, Inc. or
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Standard & Poor's Corporation, and maturing within six months after the date
of acquisition.
"CASH FLOW" shall mean, for any period, the sum, for the Company and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) EBITDA for such period minus
(b) cash taxes based on or measured by income that are paid during such
period (including penalties with respect thereto and interest thereon) minus
(c) Capital Expenditures made during such period to the extent permitted
hereunder.
"CHANGE OF CONTROL" shall mean the occurrence of any of the following
events: (a) the sale, lease or other disposition of all or substantially all
of the Capital Stock or assets of the Company (other than in an Initial
Public Offering), or a merger or consolidation of the Company with or into
another entity in a transaction in which the shareholders of the Company own
less than 50% of the voting securities of the surviving or resulting
corporation immediately after such merger or consolidation; or (b) any
liquidation, dissolution or winding up of the Company.
"CLOSING" shall have the meaning specified in paragraph 3.
"CLOSING DATE" shall have the meaning specified in paragraph 3.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COMMISSION" shall mean the United States Securities and Exchange
Commission and any successor agency having similar powers.
"COMMON STOCK" shall have the meaning specified in paragraph 1(ii).
"XXXX" shall mean Xxxx Components, Inc., a California corporation.
"CREDIT AGREEMENT" shall mean that certain Credit Agreement, dated as of
the date hereof, between the Company, the Subsidiary Guarantors named
therein, the Lenders named therein, The Provident Bank (as Cash Management
Agent) and Internationale Nederlanden (U.S.) Capital Corporation (as Agent),
as amended from time to time.
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"CURRENT LIABILITIES" shall mean, at any date of determination, the
total liabilities of the Company (including tax and other proper accruals)
which may properly be classified as current liabilities in accordance with
GAAP.
"DEAL COSTS" shall mean all costs and expenses, up to $2,500,000,
incurred by the Company in connection with the transactions contemplated by
this Agreement and the Credit Agreement, including (without limitation) the
following: (a) fees and expenses paid to the Purchasers and Electra and their
counsel, (b)fees and expenses paid to the Lender and the Agent (each as
defined in the Credit Agreement) and the Lenders' and Agent's counsel, (c)
fees and expenses paid to environmental, aerospace industry and other
consultants and (d) all other fees, commissions and expenses relating to any
of the foregoing (including, without limitation, investment banking,
independent accountants, depository, brokerage, publicity, legal, arrangement
and commitment fees, commissions and expenses).
"DEBT" shall mean, as to any Person (calculated for any Person without
duplication): (i) all liabilities, whether contingent or otherwise and
whether recourse is limited or otherwise, for borrowed money or for the
deferred purchase price of property or services (but excluding trade expenses
and accounts payable incurred in the ordinary course of business and which
are not overdue by more than 90 days unless being contested in good faith),
including obligations under leases which would be treated as Capital Leases;
(ii) reimbursement obligations with respect to letters of credit; (iii) any
obligation secured by any property or asset of such Person; (iv) any
obligation with respect to currency or hedging agreements; and (v) any of the
foregoing liabilities which such Person has guaranteed, including, without
limitation, the Subsidiary Guarantees; provided that Debt shall not include
(a) obligations of the Company with respect to the Warrants and (b)
contingent amounts payable by the Company under the Seller Note unless and
until such amounts become due and payable in cash.
"DEBT SERVICE" shall mean, for any period, the sum, for the Company and
its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) all payments of principal of
Debt (including, without limitation, the principal component of any payments
in respect of Capitalized Leases) scheduled to be made during such period
plus (b) all Interest Expense that is payable in cash for such period.
"DEFAULT": see "EVENT OF DEFAULT."
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"DEFERRED NOTE PAYABLE" shall mean all non-cash liabilities and all
non-cash expenses arising under the Technical Consulting Agreement (and which
are referred to in the Company's balance sheet under the caption "due to/due
from former shareholder").
"EBITDA" shall mean, for any period, the sum of the following for the
Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP): (a) net income for such period, plus
(b) the aggregate amount of depreciation, amortization (including, without
limitation, amortization of intangibles and amortization of Deal Costs (to
the extent that such Deal Coats do not exceed $2,500,000)), taxes based on or
measured by income and Interest Expense for such period, plus (c) any
accretion expense with respect to the Warrants and the Additional Warrants
(or any other Equity Rights with respect to the Company and its Subsidiaries)
for such period, plus (d) any non-cash charges related to the Technical
Consulting Agreement, plus (e) any non-cash expense related to any minority
interests, plus (f) any non-cash expenses related to foreign currency
translation.
"EBITDA RATIO" shall mean, at any time, the ratio of (a) all Debt of the
Company and its Subsidiaries at such time to (b) EBITDA for the period of
four consecutive fiscal quarters most recently ended prior to such time.
"EIT" shall have the meaning specified in the first paragraph hereof.
"ELECTRA" shall have the meaning specified in paragraph 3 hereof.
"ENVIRONMENTAL LAWS" means all federal, state, and local laws,
ordinances, rules, regulations, codes, duties under the common law or orders,
including, without limitation, any requirements imposed under any permits,
licenses, judgments, decrees, agreements or recorded covenants, conditions,
restrictions or easements, the purpose of which is to protect the
environment, human health, public safety or welfare, or which pertain to
Hazardous Materials.
"EQUITY RIGHTS" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any stockholders' or
voting trust agreements) for the issuance, sale, registration or voting of,
or securities convertible into, any additional shares of capital stock of any
class, or
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partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA AFFILIATE" shall mean each trade or business (whether or not
incorporated) which together with the Company is treated as a "single
employer" under sections (b), (c), (m), (n) or (o) of section 414 of the
Code, or section 4001 of ERISA; provided that in no event shall the
Purchasers or any of their Affiliates be deemed to be an ERISA Affiliate for
purposes of this Agreement.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph
10A, provided that there has been satisfied any requirement in connection
with such event for the giving of notice, or the lapse of time, or the
happening of any further condition, event or act, and "Default" shall mean
any of such events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"EXPENSES" shall have the meaning specified in paragraph 17B hereof.
"FINANCING FEE" shall have the meaning specified in paragraph 3.
"FIXED CHARGES RATIO" shall mean, as at any date, the ratio of (a) Cash
Flow for the period of four consecutive fiscal quarters ending on or most
recently ended prior to such date (or, with respect to any date prior to
December 31, 1995, for the period commencing on January 1, 1995 and ending on
the fiscal quarter ending on or most recently ended prior to such date) to
(b) Debt Service for such period.
"FORMER TRI-STAR NOTE" shall mean (a) the "Contingent Incentive
Payments" referred to in the Share Purchase Agreement dated as of October 15,
1991 among the Company, Xxxx Holdings, Inc. and Xxxx Xxxxxxxxx and (b) that
certain subordinated note, dated October 15, 1991, issued by Tri-Star
Electronics International, Inc. and payable to Tri-Star Electronics, Inc.
"FULLY DILUTED" shall mean, at any point in time, the number of common
shares outstanding, increased by all common equivalent shares (stock options,
warrants, convertible
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securities and any other security or instrument, whether in or out of the
money, that could result in additional common shares being issued at any time
in the future) at the time outstanding.
"GAAP" shall mean generally accepted accounting principles as 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, or statements by
such other entity as have been approved by a significant segment of the
accounting profession, which are in effect from time to time.
"GUARANTEE" shall mean, as applied to any obligation, a guarantee (other
than by endorsement of negotiable instruments for deposit or collection in
the ordinary course of business), direct or indirect, in any manner, of any
part or all of such obligation.
"GUARANTEED OBLIGATIONS" shall have the meaning specified in paragraph
14A.
"HAZARDOUS MATERIALS" means any product, substance, chemical, material
or waster, whose presence, nature, quantity and/or intensity of existence,
use, manufacture, processing, treatment, storage, disposal, transportation,
spill, release or effect, either by itself or in combination with other
materials expected to be on the property owned or leased by the Company or
any of its Subsidiaries (the "Property") is either (A) potentially injurious
to public health, safety, welfare, or the environment, or to the Property;
(B) regulated, monitored or subject to reporting by any governmental agency;
or (C) a basis for potential liability to any governmental agency or a third
party under any applicable statute or common law theory. Without limiting
the foregoing, the term, "Hazardous Materials," includes but is not limited
to any material, waste or substance which is or contains (A) petroleum or
petroleum products, including crude oil or any fraction thereof, natural gas,
or synthetic gas usable for fuel or any mixture thereof, (B) asbestos, (C)
polychlorinated bipheneyls, (D) flammable explosives; (E) radioactive
materials; (F) radon in excess of EPA recommended exposure limits or (G)
paint containing concentrations of lead in excess of .06% or mercury in
excess of 200 parts per million, and located within any portion of the Real
Property.
"ING WARRANT" shall mean that certain Common Stock Purchase Warrant,
dated as of the date hereof, of the Company in favor of Internationale
Nederlanden (U.S.) Capital Corporation.
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"INITIAL PUBLIC OFFERING" shall mean the closing of an underwritten
public offering for shares of common stock of the Company pursuant to a
registration statement under the Securities Act, with proceeds to the Company
of $25,000,000 or more, and valuing the total common equity of the Company at
$55,000,000 or more at closing.
"INTERCOMPANY NOTE" shall mean a promissory note of Xxxx to the Company,
in an aggregate principal amount of $1,500,000, evidencing a loan made by the
Company to Xxxx solely to permit Xxxx to repay certain existing Debt of Xxxx.
"INTEREST EXPENSE" shall mean, for any period, all interest expense less
interest income for such period for the Company and its Subsidiaries
(determined on a consolidated basis without duplication in accordance with
GAAP), including (without limitation) the following: (a) all interest in
respect of Debt (including, without limitation, the interest component of any
payments in respect of Capitalized Leases) accrued or capitalized during such
period (whether or not actually paid during such period) and (b) the net
amounts payable (or minus the net amount receivable) under Interest Rate
Protection Agreements (as defined in the Credit Agreement) during such period
(whether or not actually paid or received during such period).
"LEVERAGE RATIO" shall mean, at any time, the ratio of Total Liabilities
to Net Worth of the Company at such time.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease
in the nature thereof and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction).
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" within the
meaning of section 3(37) of ERISA or section 414(f) of the Code to which
contributions are or have been made by the Company or any ERISA Affiliate.
"NET WORTH" shall mean, as at any date for any Person, the sum for such
Person and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following:
(a) the amount of paid-in capital (both in respect of common equity
and preferred equity), plus
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(b) the amount of surplus and retained earnings (or, in the case
of a surplus or retained earnings deficit, minus the amount of such
deficit), plus
(c) the cumulative effect of Deal Costs, any warrant accretion
expense (as such term is used in GAAP) or any original issue discount
accretion expense (as such term is used in GAAP) arising after the
Closing Date, minus
(d) the cost of treasury shares, plus
(e) the value ascribed to the Warrants and the Additional Warrants
(and any other Equity Rights exercisable in respect of capital stock of
the Company) and the cumulative effect of any change in the valuation of
the Warrants and the Additional Warrants, plus
(f) the cumulative effect of any original issue discount related
to the Seller Note (including any non-cash portion thereof relating to
the consulting arrangements contemplated thereby) and any other non-cash
effect of the Seller Note, plus
(g) $6,627,000;
provided that (i) any predecessor basis adjustment required under GAAP and
(ii) any foreign currency translation adjustments permitted under GAAP shall
be disregarded in calculating "Net Worth".
"NOTES" shall have the meaning specified in paragraph 1(a).
"OFFICER'S CERTIFICATE" shall mean a certificate of the Company (or, if
specified, a Subsidiary of the Company) signed by a Responsible Officer.
"ORDER" shall mean the Order Against Defendants XxXxxxx Aircraft
Holdings, Inc., et al., dated July 12, 1994, issued by the Superior Court of
the State of California for the County of Los Angeles in connection with
Xxxxx Xxxxxxx x. Xxxx Components, Inc., et al.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"PENALTY WARRANTS" shall have the meaning specified in paragraph 16D.
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"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, an estate, a trust, an unincorporated organization
and a government or any department or agency thereof.
"PLAN" shall mean an "employee pension benefit plan" within the meaning
of section 3(2) of ERISA maintained or to which contributions are or have
been made by the Company or any ERISA Affiliate.
"PROVIDENT WARRANT" shall mean that certain Common Stock Purchase
Warrant, dated as of the date hereof, of the Company in favor of The
Provident Bank.
"PURCHASE PRICE" shall have the meaning specified in paragraph 5.
"PURCHASERS" shall have the meaning specified in the first paragraph
hereof.
"PUT AMOUNT" shall mean an amount equal to (a) the greater of (i) the
price that would be paid for the entire common equity interest in the Company
on a going-concern basis in a single arms-length transaction between a
willing buyer and a willing seller (neither acting under compulsion), using
valuation techniques then prevailing in the securities industry and always
determined in accordance with the Valuation Procedures, and assuming full
disclosure and understanding of all relevant information and a reasonable
period of time for effectuating such sale, (ii) the net book value of the
Company determined by reference to the Company's financial statements as of
the most recently ended fiscal quarter, or (iii) a multiple of (1) 6.0 times
earnings before interest, income taxes, depreciation and amortization
(determined in accordance with GAAP) less (2) amounts outstanding under the
Credit Agreement and this Agreement less (3) any other indebtedness (but
excluding the Seller Note) (as defined in accordance with GAAP) plus (4) cash
and cash equivalents of the Company, divided by (b) the number of shares of
Common Stock outstanding on a Fully Diluted basis. For purposes of
determining the Put Amount, (i) the exercise price of options or warrants to
acquire Common Stock which are deemed to have been exercised for the purpose
of determining the number of shares of Common Stock outstanding on a Fully
Diluted basis shall be deemed to have been received by the Company, (ii) the
liquidation preference or indebtedness, as the case may be, represented by
securities which are deemed exercised for or converted into Common Stock for
the purpose of determining the number of shares of Common Stock outstanding
on a Fully Diluted basis, (iii) any contract limitation in respect of the
shares of Common Stock, including their transfer, voting and
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other rights and (iv) any illiquidity arising by contract law in respect of
the shares of Common Stock and any voting rights or control rights amongst
the shareholders of the Company shall be deemed to have been eliminated or
cancelled.
"RELATED AGREEMENTS" means the Advisory Agreement, the Notes, the
Warrants, the Stock Purchase Agreement, the Amended and Restated Shareholders
Agreement and the Amended and Restated Registration Rights Agreement.
"RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the indoor or outdoor environment, including, without limitation, the
movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata.
"RESPONSIBILITY OFFICER" shall mean the Chairman of the Board, Chief
Executive Officer, President, Chief Operating Officer, Chief Financial
Officer, Treasurer, Secretary and, with respect to the Company, any Vice
President; provided that, for purposes of this Agreement, Xxxxx Xxxxxxx shall
be deemed not to be a Responsible Officer.
"SECURITIES" shall have the meaning specified in paragraph 1.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended from
time to time.
"SELLER NOTE" shall mean the Former Tri-Star Note and the Deferred Note
Payable.
"SENIOR DEBT" shall mean indebtedness of the Company and any of its
Subsidiaries incurred under the Credit Agreement, together with any
refinanced Senior Debt permitted by paragraph 7B (ii) and additional Senior
Debt permitted by paragraph 7B (iii).
"SENIOR FINANCING" shall mean the transactions pursuant to and
contemplated by the Credit Agreement.
"SENIOR OBLIGATIONS" shall mean the obligations of the Company and any
of its Subsidiaries incurred with respect to the Senior Debt, including
principal and interest (including post-petition interest at a rate not to
exceed the applicable pre-default rate of interest with respect thereto
(which amount shall not exceed the Base Rate plus the Applicable Margin (each
as defined in the Credit Agreement)) and liabilities with respect to
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yield protection, indemnities, reimbursement obligations and fees and
expenses, all as specified in the Credit Agreement (or any agreement
evidencing the refinanced Senior Debt referred to in paragraph 7B(ii)) and
related to such indebtedness; provided that the Senior Obligations exclude,
without limitation, any put rights with respect to warrants issued to the
parties to the Credit Agreement.
"SIGNIFICANT HOLDER" shall mean (i) the Purchasers, so long as the
Purchasers or the Purchasers' nominees shall hold any Notes (or any other
security of the Company acquired by the Purchasers in exchange for such
Notes) and (ii) any ether holder of at least 50% of the aggregate principal
amount of the Notes from time to time outstanding.
"STOCK PURCHASE AGREEMENT" shall mean that certain Stock Purchase
Agreement, dated as of the date hereof, between Key Equity Capital
Corporation and the Purchasers.
"SUBORDINATED LIABILITIES" shall mean the indebtedness of the Company
and any of its Subsidiaries incurred under this Agreement and guarantees
related to such indebtedness, including (without limitation) principal and
interest on the Notes, fees, expenses, indemnities and liabilities with
respect to representations related to such indebtedness and obligations of
the Company with respect to the Put (including, without limitation, the Put
Amount and any interest thereon) described in paragraph 16C hereof; provided
that the Subordinated Liabilities shall not include any obligations of the
Company and any of its Subsidiaries (i) representing damages suffered by the
Purchasers for any breach or misrepresentation by the Company or otherwise
with respect to the Foreign Investment in Real Property Tax Act under this
Agreement or (ii) representing liabilities in respect of environmental
matters incurred by the Purchasers for any breach or misrepresentation by the
Company or otherwise with respect to environmental liabilities under this
Agreement; and provided, further, that the Subordinated Liabilities shall not
include (x) the Advisory Fee except to the extent and as provided in
paragraph 8(a)(iii) hereof or (y) after bankruptcy proceedings have been
initiated with respect to the Company or following acceleration of the Notes,
attorneys' fees incurred by the Purchasers or their Affiliates with respect
to such events, or (z) the Penalty Warrants.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership or similar entity, a majority of the Voting Stock or interests of
which is at the time as of which any determination is being made owned by
such Person either directly or indirectly through subsidiaries.
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"SUBSIDIARY GUARANTEE" shall mean a Guarantee pursuant to the terms of
this Agreement by any Subsidiary Guarantor.
"SUBSIDIARY GUARANTORS" shall mean Xxxx Components, Inc. (but only to
the extent permitted by the Order and as limited by paragraph 14I); Xxxx
Holdings, Inc.; Tri-Star Technologies; Tri-Star Technologies, Inc.; Unidec
S.A.; Tri-Star Electronics International, Inc.; Tri-Star Holdings, Inc.;
Xxxxxxxxxxx International Limited; Xxxxxxxxxxx International, Inc.; and such
other Persons as may become Subsidiary Guarantors pursuant to the provisions
of this Agreement; provided, however, that no Person shall be a Subsidiary
Guarantor after such time as it has been released from its Subsidiary
Guarantee pursuant to the provisions of this Agreement.
"TECHNICAL CONSULTING AGREEMENT" shall mean the Technical Consulting
Agreement dated as of October 15, 1991 between the Company and Xxxx Xxxxxxxxx.
"TOTAL LIABILITIES" shall mean, as at any date, the sum, for the Company
and its Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP), of the following: (a) all Debt and (b) all other
liabilities that should be classified as liabilities on a balance sheet,
including, without limitation, all reserves (other than general contingency
reserves) and all deferred taxes and other deferred items; provided that
"Total Liabilities" shall not include any contingent liabilities of the
Company under the Seller Note unless and until such liabilities become due
and payable in cash.
"TRANSFEREE" shall mean, with respect to all or any part of any of the
Securities, any direct or indirect transferee with (i) net worth, assets or
investment discretion with respect to assets of at least $25,000,000 and (ii)
in the opinion of the transferor, sufficient financial and business
sophistication, knowledge and experience, including, without limitation,
private venture capital entities that satisfy the requirements of clause (i)
above.
"TRIGGERING EVENT" shall mean the occurrence of the event described in
clause (i) below together with either of the events described in clause
(ii)(a) or (ii)(b) below: (i) the payment in full (including payment of all
principal and all accrued and unpaid interest) of the Notes and (ii) either
(a) a sale of all or substantially all of the stock or assets of the Company
for cash in an amount equivalent to a common equity valuation of $30,000,000
or more or (b) an Initial Public Offering.
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"VALUATION PROCEDURES" shall mean, with respect to the determination of
any amount or value required to be determined in accordance with such
procedure, a determination (which shall be final and binding on the parties)
made (i) by agreement among the Company and the Purchasers within thirty (30)
days following the event requiring such determination or (ii) in the absence
of such an agreement, by an Appraiser (as defined below) selected as set
forth below. If required, an Appraiser shall be selected within ten (10)
days following the expiration of the 30-day period referred to above, either
by agreement among the Company and the Purchasers or, in the absence of such
agreement, by lot from a list of four potential Appraisers remaining after
the Company nominates three, the Purchasers nominate three, and each side
eliminates one potential Appraiser. The Appraiser shall be instructed by the
Company and the Purchasers to make its determination within thirty (30) days
of its selection. The fees and expenses of an Appraiser selected hereunder
shall be borne solely by the Company. As used herein, "Appraiser" shall mean
a nationally recognized investment banking firm.
"VOTING STOCK" shall mean securities of any class or series (including
rights to purchase such securities through warrants, options or otherwise) of
a corporation or association the holders of which are entitled to participate
in the election of directors (or persons performing similar functions) of
such corporation or association.
"WARRANTS" shall have the meaning specified in paragraph 1(b).
"WELFARE PLAN" shall mean an "employee welfare benefit plan" within the
meaning of section 3(1) of ERISA maintained or to which contributions have
been made by the Company or any ERISA Affiliate.
14. GUARANTEE OF NOTES AND OTHER OBLIGATIONS.
14A. OBLIGATIONS GUARANTEED. Each of the Subsidiary Guarantors, jointly
and severally, in consideration of the execution and delivery of this
Agreement and certain other benefits to the Subsidiary Guarantors which are
expected to arise as a result of the transactions contemplated by this
Agreement, hereby unconditionally and irrevocably guarantees to the
Purchasers and to the holders from time to time of the Notes the due and
punctual payment of the principal of and interest on the Notes when and as
the same shall become due and payable (whether at the maturity thereof, by
acceleration, by notice of prepayment or otherwise) according to the terms
thereof and of this Agreement, as such may be amended from time to time, and
the due
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and punctual payment of any other amounts owing to the Purchasers and to such
holders under or in respect of the Notes, and the due and punctual payment of
any obligations with respect to the Put owing to the Purchasers and to the
holders of the Warrants, under this Agreement and all other payment
obligations of the Company and its Subsidiaries hereunder and thereunder,
whether absolute or contingent, liquidated or unliquidated (collectively, the
"Guaranteed Obligations"). In the absence of the due observance and
performance by the Company and its Subsidiaries of any of its or their other
obligations, undertakings and conditions contained in this Agreement, each
Subsidiary Guarantor shall use its best efforts, to the extent practicable,
to provide reasonably equivalent performance intended to achieve comparable
results. If the Company or its Subsidiaries shall not punctually pay any such
principal, interest or other amounts in respect of the Guaranteed Obligations
(regardless of whether the Purchasers or the holders of the Notes or Warrants
have recourse against the Company), each Subsidiary Guarantor shall provide
that such payment be made forthwith thereafter. If the Purchasers or any of
the holders of the Notes shall have the right to declare any or all of the
Notes or other Guaranteed Obligations due and payable,. and acceleration of
the payment of such Notes or other Guaranteed Obligations is stayed, enjoined
or otherwise prevented for any reason, in each case as determined in good
faith by the Purchasers and each holder of Notes, each Subsidiary Guarantor,
upon demand therefor, shall pay to the Purchasers and each holder of Notes,
the sums which would have been due to the Purchasers and such holders under
this Agreement if such acceleration had occurred, all as permitted by
applicable law.
14B. OBLIGATIONS UNCONDITIONAL. Each Subsidiary Guarantor agrees that
its obligations hereunder are absolute and unconditional, irrespective of the
validity, regularity or enforceability of or any change in or amendment to
any Note or the Guaranteed Obligations or this Agreement, the institution or
absence of any action to enforce the same, the waiver or consent by the
Purchasers or the holder of any Note with respect to the provisions thereof
or hereof, the exchange, release or non-perfection of any collateral
security, or any release or amendment or waiver or consent to departure from
the terms of any Subsidiary Guarantee of, the Notes or any other Guaranteed
Obligations, the obtaining of any judgment against the Company or any
Subsidiary or any action to enforce the same, the inability to recover from
the Company or any Subsidiary because of any statute of limitations, laches
or otherwise or any other circumstance which might otherwise constitute a
legal or equitable discharge of or a defense to a guarantor, and that the
provisions of this paragraph 14 constitute a guarantee of payment and not of
collectibility.
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14C. WAIVERS AND AGREEMENTS. Each Subsidiary Guarantor hereby
unconditionally: (i) waives notice of acceptance hereof, of any action taken
or omitted in reliance hereon and of any defaults in respect of the Notes or
in the payment of any other Guaranteed Obligations, diligence, protest,
presentment, filing of claims with a court in the event of the bankruptcy of
the Company, any right to require a proceeding first against the Company, or
that the Company be joined in any proceeding against the Subsidiary
Guarantors, any marshalling of assets of the Subsidiary Guarantors or the
Company, any notice of default with respect to any of the Notes or the other
Guaranteed Obligations or this Agreement or any other act or omission or
thing or delay to do any other act or thing which might in any manner or to
any extent vary the risk of the Subsidiary Guarantors or which might
otherwise operate as a discharge of the Subsidiary Guarantors; (ii) agrees
that this Subsidiary Guarantee shall remain in full force and effect without
regard to, and shall not be affected or impaired by, any invalidity,
irregularity or unenforceability in whole or in part of any of the Notes or
the other Guaranteed Obligations or this Agreement or any of the limitations
of liability or payment conditions thereunder which may now or hereafter be
caused or imposed in any manner whatsoever; (iii) agrees that this Subsidiary
Guarantee shall not be subject to any counterclaim (other than those which
are compulsory in nature), set-off, deduction or defense based upon any claim
the Subsidiary Guarantors may have against the Company or the Purchasers or
any holder of the Notes hereunder or otherwise; and (iv) agrees that this
Subsidiary Guarantee shall be discharged only by complete performance of the
undertakings in the Notes and in this paragraph 14. Nothing herein is
intended to impair any rights of the Subsidiary Guarantors to enforce any
rights they may have against any Person by way of a separate proceeding or
action.
14D. OBLIGATIONS UNIMPAIRED. Each of the Subsidiary Guarantors
authorizes the Purchasers and the holders of the Notes and the other
Guaranteed Obligations, without notice or demand to the Subsidiary Guarantors
and without affecting its liability hereunder, from time to time (a) to
renew, compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of, all or any part of the
Guaranteed Obligations; (b) to take and hold security for the payment of the
Notes and the other Guaranteed Obligations, for the performance of this
Subsidiary Guarantee or otherwise for the Guaranteed Obligations and to
exchange, enforce, waive and release any such security; (c) to apply any such
security and to direct the order or manner of sale thereof as the Purchasers
and such holders in their discretion may determine; (d) to obtain additional
or substitute endorsers or guarantors; (e) to exercise or refrain
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from exercising any rights against the Company or others; and (f) to apply
any sums, by whomsoever paid or however realized, to the payment of the
principal of, premium, if any and interest on the Notes and any other
obligation hereunder. Each of the Subsidiary Guarantors waives any right to
require the Purchasers and the holders of the Notes to proceed against any
additional or substitute endorsers or guarantors or to pursue or exhaust any
security provided by the Company, the Subsidiary Guarantors or any other
Person or to pursue any other remedy available to the Purchasers or to such
holders.
14E. WAIVER OF SUBROGATION, ETC. Each of the Subsidiary Guarantors
agrees not to exercise, and hereby irrevocably waives, to the fullest extent
it may effectively do so, any and all rights of reimbursement, indemnity and
other rights of repayment which it may have or which it may acquire by way of
subrogation or otherwise as a result of the Company's failure to observe or
perform any of the Guaranteed Obligations or its undertakings hereunder or
under any of the Guaranteed Obligations or as a result of any other event or
condition, whether such rights arise directly against the Company or through
any holders of a Guaranteed Obligation.
14F. RESCISSION OF PAYMENT. This Subsidiary Guarantee shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
a part thereof, of the principal of or interest on any of the Notes or of any
other Guaranteed Obligation is rescinded or must otherwise be restored or
returned by the Purchasers or any subsequent holder of any of the Notes or
any other Guaranteed Obligation upon the insolvency, bankruptcy or
reorganization of the Company or any of its Subsidiaries, or otherwise, all
as though such payment had not been made.
14G. ELECTION TO PERFORM OBLIGATIONS. The Subsidiary Guarantors may at
any time elect to pay or otherwise perform any obligation of the Company or
any of its Subsidiaries under this Agreement or in respect of the Notes or
any other Guaranteed Obligation, which shall operate as a discharge and
release of the Company from such obligation to the Purchasers or any
subsequent holders of any of the Notes or any other Guaranteed Obligation,
provided that no such election shall release the Company from any of its
other obligations hereunder and under the Notes and any other Guaranteed
Obligations.
14H. RIGHTS OF CONTRIBUTION. The Subsidiary Guarantors hereby agree, as
between themselves, that if any Subsidiary Guarantor shall become an Excess
Funding Guarantor (as defined below) by reason of the payment by such
Subsidiary Guarantor of any Guaranteed Obligations, each other Subsidiary
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Guarantor shall, on demand of such Excess Funding Guarantor (but subject to
the next sentence), pay to such Excess Funding Guarantor an amount equal to
such Subsidiary Guarantor's Pro Rata Share (as defined below and determined,
for this purpose, without reference to the assets, debts and liabilities of
such Excess Funding Guarantor) of the Excess Payment (as defined below) in
respect of such Guaranteed Obligations; provided that the aggregate amount
that Xxxx shall be required to pay hereunder shall be limited as provided in
paragraph 14I hereof. The payment obligation of a Subsidiary Guarantor to
any Excess Funding Guarantor under this paragraph 14H shall be subordinate
and subject in right of payment to the prior payment in full of the
obligations of such Subsidiary Guarantor under the other provisions of this
paragraph 14 and such Excess Funding Guarantor shall not exercise any right
or remedy with respect to such excess until payment and satisfaction in full
of all of such obligations.
For purposes of this paragraph 14H, (i) "Excess Funding Guarantor" shall
mean, in respect of any Guaranteed Obligations, a Subsidiary Guarantor that
has paid an amount in excess of its Pro Rata Share of such Guaranteed
Obligations, (ii) "Excess Payment" shall mean, in respect of any Guaranteed
Obligations, the amount paid by an Excess Funding Guarantor in excess of its
Pro Rata Share of such Guaranteed Obligations and (iii) "Pro Rata Share"
shall mean, for any Subsidiary Guarantor, the ratio (expressed as a
percentage) of (x) the amount by which the aggregate present fair saleable
value of all assets of such Subsidiary Guarantor (excluding any shares of
stock of any other Subsidiary Guarantor) exceeds the amount of all the debts
and liabilities of such Subsidiary Guarantor (including contingent,
subordinated, unmatured and unliquidated liabilities, but excluding the
obligations of such Subsidiary Guarantor hereunder and any obligations of any
other Subsidiary Guarantor that have been Guaranteed by such Subsidiary
Guarantor) to (y) the amount by which the aggregate fair saleable value of
all assets of the Company and all of the Subsidiary Guarantors exceeds the
amount of all the debts and liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of the
Company and the Subsidiary Guarantors hereunder) of the Company and all of
the Subsidiary Guarantors, all as of the Closing Date. If any Subsidiary
becomes a Subsidiary Guarantor hereunder subsequent to the Closing Date, then
for purposes of this paragraph 14H such subsequent Subsidiary Guarantor shall
be deemed to have been a Subsidiary Guarantor as of the Closing Date and the
aggregate present fair saleable value of the assets, and the amount of the
debts and liabilities, of such Subsidiary Guarantor as of the Closing Date
shall be deemed to be equal to such value and amount
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on the date such Subsidiary Guarantor becomes a Subsidiary Guarantor hereunder.
14I. LIMITATION ON XXXX GUARANTEE. Notwithstanding the foregoing
provisions of this paragraph 14, the maximum aggregate amount that Xxxx may
be required to pay hereunder shall not exceed an amount equal to $13,500,000
less the outstanding principal amount of the Intercompany Note (it being
understood that all payments and prepayments of the Guaranteed Obligations by
the Company or any of its Subsidiaries for purposes of this paragraph 14I be
applied first to the portion of the Guaranteed Obligations that exceeds said
$13,500,000 and last to the portion of the Guaranteed Obligations that does
not exceed $13,500,000) and that Xxxx shall only be liable hereunder to the
extent permitted under the Order. It is understood and agreed that, with
respect to the guarantee of Xxxx pursuant to the Credit Agreement, Cory's
liability hereunder will only be in an amount which, when added to its
liability under the Credit Agreement, does not exceed said $13,500,000. It
is further understood and agreed that Cory's liability will be applied as
follows: first, to the guarantee of Xxxx under the Credit Agreement; second,
to the guarantee of Xxxx under this Agreement (other than with respect to the
Put Amount); and third, to the guarantee of Xxxx with respect to the put
rights contained in this Agreement, the ING Warrant and the Provident Warrant.
14J. LIMITATION ON XXXXXX LIABILITY. It is understood and agreed that
the sole recourse in respect of the obligations of Tri-Star Technologies
under this paragraph 14 shall be to the assets of Tri-Star Technologies and
that nothing contained herein shall create any obligation of or right to look
to Xxxxxxxxx Xxxxxx or his assets individually for the satisfaction of such
obligations.
14K. LIMITATION ON GUTERMANN LIABILITY. It is understood and agreed
that the sole recourse in respect of the obligations of Unidec S.A. under
this paragraph 14 shall be to the assets of Unidec S.A. and that nothing
contained herein shall create any obligation of or right to look to Xxxxxx
Xxxxxxxxx or her assets individually for the satisfaction of such obligations.
14L. GENERAL LIMITATION ON GUARANTEES. In any action or proceeding
involving any state corporate law, or any state or Federal bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors
generally, if the obligations of any Subsidiary Guarantor hereunder would
otherwise be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors (other than the holders of
the Senior Debt), then, notwithstanding any other provisions
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hereof to the contrary, the amount of such liability shall, without any
further action by such Subsidiary Guarantor, the Purchasers, the holder of
any Note or any other Person, be automatically limited and reduced to the
highest amount that is valid and enforceable and not subordinated to the
claims of other creditors as determined in such action or proceeding.
14M. SURVIVAL. The obligations of the Subsidiary Guarantors under this
paragraph 14 shall survive the transfer and payment in full of all of the
Notes and any other Guaranteed Obligation.
15. ADVISORY FEE. For so long as the Purchasers hold any Note, any
Warrant exchangeable into at least 2% of the issued and outstanding Common
Stock on a Fully Diluted basis, or at least 2% of the issued and outstanding
Common Stock on a Fully Diluted basis, the Company will pay to Electra in
cash an annual fee (the "Advisory Fee") in the amount of $72,000, payable in
advance in equal semi-annual installments on the first Business Day of each
January and July, and commencing with the first Business Day in the January
next succeeding the date hereof; provided that if the Purchasers no longer
hold any Note and an Initial Public Offering has occurred, no Advisory Fee
will be payable. In addition, at the Closing, the Company will pay to
Electra a pro rated amount of the semi-annual installment for the period
commencing July 1, 1994.
16. WARRANTS.
16A. TERM; EXERCISE. Subject to the terms and conditions contained in
this Agreement and in the Warrants, the Warrants are exercisable, in the
manner set forth in the Warrants, in whole or in part, at any time and from
time to time during the period commencing on the Closing Date and ending at
5:00 p.m. New York City time on December 31, 2004, and shall be void
thereafter.
16B. SERIES OF WARRANTS AND TRIGGERING EVENT. The Warrants will be
issued in several series, which will be identical in all respects except as
to the date after which the Warrants may be exercised and transferred. At
the Closing, the Purchasers will receive the following Warrants exercisable
into an aggregate of 15% of the issued and outstanding Common Stock on a
Fully Diluted basis:
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Percentage of
Series Shares For Which
of Warrant Exercisable
---------- ----------------
Series A 8%
Series B 2%
Series C 2%
Series D 3%
The Series A Warrants will be immediately exercisable and transferable.
The Series B, Series C and Series D Warrants will be identical to the Series A
Warrants in all respects, except that they may only be exercised into
shares of Common Stock and may only be transferred if no Triggering Event
occurs prior to the following corresponding dates:
Series of Warrant
If No Triggering Becoming Exercisable
Event Occurs Prior To: and Freely Transferable
---------------------- ----------------------
December 31, 1996 Series B
December 31, 1997 Series C
December 31, 1998 Series D
If a Triggering Event occurs prior to the date a series of Warrant would
otherwise become exercisable or freely transferable, such series of Warrant
shall be void as of the date of occurrence of such Triggering Event.
16C. PUT. (a) If no Triggering Event shall have occurred by December 31,
2000, then:
(i) The Purchasers or other holder of the Warrants may, at
any time thereafter, by giving written notice to the Company (the "Put
Notice"), require the Company to repurchase (the "Put") all or any portion of
the Warrants held by the Purchasers or other holder of the Warrants for an
amount equal to the Put Amount and corresponding to that number of shares of
Common Stock then issuable upon exercise of the Warrants designated in the
Put Notice. The Company shall pay to the Purchasers such Put Amount within
366 days of the date of the Put and shall execute and deliver to the
Purchasers a promissory note evidencing such Put Amount; any unpaid balance
of the Put Amount shall bear interest, which interest shall be paid together
with any payment of the Put Amount, at a rate of 14% per annum.
(ii) Immediately upon receipt of (i) a Put Notice or (ii)
notice from the holders of any of the ING Warrant, the Provident Warrant or
the Banc One Warrant (such holders being
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referred to herein collectively as the "Put Holders") that the Purchasers or
such Put Holders intend to exercise put rights in connection with the
repurchase of any of their warrants by the Company, the Company shall, before
repurchasing any such warrants, give written notice thereof to the Purchasers
and/or all other Put Holders, as the case may be. For a period of twenty
(20) days following receipt of such notice, the Purchasers and each Put
Holder shall be entitled, by written notice to the Company, the Purchasers
and/or each Put Holder, as the case may be, to elect to require the Company
to repurchase for cash its pro rata share (on the basis of the number of
shares of Common Stock then issuable upon exercise of all of the warrants
held by the Purchasers and each such Put Holder) of the warrants held by the
Purchasers and each such Put Holder. If, at the expiration of such
twenty-day period the Purchasers or any Put Holders have not elected to have
the Company repurchase their warrants, the Company shall repurchase only
those warrants for which notice has been received.
(iii) If the Company shall not have funds legally available
in the amount necessary to repurchase all warrants of the Purchasers and Put
Holders with respect to which notice has been received, then such warrants
shall be repurchased by the Company on a pro rata basis in accordance with
the number of shares of Common Stock then issuable upon exercise of all of
the warrants held by the Purchasers and each such Put Holder. Any Put not
satisfied in full in cash shall remain an obligation of the Company and shall
be evidenced by a promissory note due within 366 days and bearing interest
at a rate of 14% per annum, which interest shall be paid together with the
Put Amount.
(b) If, prior to December 31, 2000, any Put Holder notifies
the Company that such Put Holder intends to exercise put rights in connection
with the repurchase of any of its warrants by the Company, the Company shall,
before repurchasing any such warrants, give written notice thereof to the
Purchasers and all other Put Holders. For a period of twenty (20) days
following receipt of such notice, the Purchasers shall be entitled, by
written notice to the Company and each Put Holder, to elect to require the
Company to repurchase at a price equal to the Put Amount (i) for cash, pro
rata with the Put Holders, Warrants representing 40% of all shares of Common
Stock issuable upon the exercise of Warrants then held by the Purchasers, and
(ii) with a promissory note due within 366 days and bearing interest at a
rate of 14% per annum (which interest shall be paid together with the Put
Amount), any or all other Warrants held by the Purchasers.
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16D. PENALTY WARRANTS. For so long as the Purchasers hold any Note as
to which an event described in clause (i) of paragraph 10A hereof has
occurred, the Company will promptly issue to the Purchasers, for no
additional consideration, additional Warrants in the form of the Series A
Warrant (the "Penalty Warrants") representing the right to purchase that
number of shares of Common Stock equal to 1% of the then issued and
outstanding Common Stock on a Fully Diluted basis for every calendar quarter
or a portion thereof that such event is not cured.
16E. ANTIDILUTION PROVISIONS. The percentage of Common Stock for which
the Warrants may be exercised shall be adjusted as set forth in the Warrants
in order to preserve the relative position of the holder of the warrants
vis-a-vis the percentage of the issued and outstanding shares of Common Stock
which such holder may acquire upon exercise of the Warrants.
16F. REGISTRATION. Pursuant to the terms of the Amended and Restated
Registration Rights Agreement, the Purchasers shall have and be entitled to
(i) two demand and (ii) unlimited piggyback registrations for shares of
Common Stock issuable upon exercise of the Warrants. The Purchasers' demand
registration rights will have preference over other demand registration
rights granted by the Company, and the Purchasers' piggyback registration
rights will be pro rata with any other holders of capital stock of the
Company participating in such registration, to the extent and as provided in
the Amended and Restated Registration Rights Agreement.
16G. VOTING. To the extent permitted by applicable law, the Warrants
shall entitle the holders thereof to vote with the Common Stock of the
Company that number of votes equal to the number of shares of Common Stock
issuable from time to time upon exercise of the Warrants on any matters upon
which the holders of Common Stock are entitled to vote.
17. MISCELLANEOUS.
17A. PAYMENTS WITH RESPECT TO SECURITIES. The Company agrees that, so
long as the Purchasers shall hold any Note or any Warrant, it will make
payments of principal of, and interest on, the Notes and payments in respect
of any such other Security, by wire transfer of immediately available funds
for credit to the Purchasers' account or accounts, as specified in Schedule 17A
attached hereto, or to such other account or accounts as the Purchasers
may designate in writing, notwithstanding any contrary provision herein or in
any Note or any other Security with respect to the place of payment. The
Purchasers agree that,
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before disposing of any Note, the Purchasers will make a notation thereon (or
on a schedule attached thereto) of all principal payments previously made
thereon and of the date to which interest thereon has been paid, provided
that the Purchasers shall have no liability for failure to do so. The
Company agrees to afford the benefits of this paragraph 17A to any Transferee
of any Note purchased by the Purchasers hereunder.
17B. EXPENSES. The Company agrees, whether or not the transactions
hereby contemplated shall be consummated, to pay, and save the Purchasers and
Electra harmless against liability for the payment of, all reasonable
out-of-pocket expenses arising in connection with this Agreement, the Notes,
the Warrants and the shares of common stock and/or preferred stock being
purchased (or otherwise issuable) to the Purchasers hereunder and under the
Related Agreements and the transactions hereby and thereby contemplated,
including, without limitation, the following (the "Expenses"): (i) all
document production and duplication charges, (ii) all fees and expenses of
counsel, accountants or advisors engaged by the Purchasers in connection with
such agreements or instruments, or the transactions contemplated hereby or
thereby, (iii) all expenses, including attorneys fees and expenses, incurred
by the Purchasers or any of the Purchasers' Affiliates with respect to the
enforcement of any rights or provisions of any such agreement or instrument,
or in responding to any subpoena or other legal process issued in connection
with such agreements and instruments or the transactions contemplated hereby
or thereby, and (iv) all expenses incurred in connection with the printing of
such agreements and instruments and all taxes (together in each case with
interest and penalties, if any, and any income tax payable by the Purchasers
in respect of any reimbursement therefor) which may be payable in respect of
the execution and delivery of such agreements or instruments, or the
issuance, delivery or purchase by the Purchasers of any Note or Warrant. The
Company further agrees to indemnify and save harmless the Purchasers' and
each of the Purchasers' officers, directors, employees and agents (herein
called the "indemnified parties") from and against any and all actions,
causes of action, suits, losses, liabilities and damages, and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
in connection therewith (herein called the "indemnified liabilities")
incurred by the indemnified parties as a result of, or arising out of, or
relating to any of the transactions contemplated hereby or by the Related
Agreements, except for any indemnified liabilities arising on account of the
gross negligence or willful misconduct of the indemnified parties, provided
that, if and to the extent such agreement to indemnify may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
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and satisfaction of each of the indemnified liabilities which shall be
permissible under applicable law. The obligations of the Company under this
paragraph 17B shall survive the transfer of any Note or Warrant and the
payment of any Note or Warrant.
17C. AMENDMENTS, CONSENTS AND WAIVERS. This Agreement may be amended,
and the Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, only with the written consent to
such amendment, action or omission to act, of the Significant Holder, or the
holder of Warrants exchangeable into 5% or more of the Common Stock from time
to time outstanding, affected by such amendment, action or omission to act
and each holder of any Security at the time or thereafter outstanding shall
be bound by any consent authorized by this paragraph 17C, whether or not such
Security shall have been marked to indicate such consent; provided that
notwithstanding anything in this paragraph 17C to the contrary, without the
written consent of the holder or holders of all Securities at the time
outstanding, no consent, amendment or waiver to or under this Agreement shall
extend or reduce the maturity of any Security, or reduce the rate or affect
the time of payment of interest payable with respect to any Security, or
affect the exchange or conversion rights of any Security, or affect the time,
amount or allocation of any required or optional prepayments, or reduce the
proportion of the amount of the Securities required with respect to any
consent, amendment or waiver of, or contemplated by, this Agreement; and
provided, further, that no amendment to this Agreement shall increase the
remaining principal amount or extend the maturity of the Notes or increase
the rate or affect the time of payment of interest payable with respect to
the Notes, in each case from that in effect as of the date hereof, or
materially adversely affect the rights (taken as a whole) of any holder of
Senior Debt without the written consent of the Agent (as defined in the
Credit Agreement). The Company shall promptly send copies of any amendment,
consent or waiver (and any request for any such amendment, consent or waiver)
relating to this Agreement, any Related Agreement or the Securities to the
Purchasers and, to the extent practicable, shall consult with the Purchasers
in connection with each such amendment, consent and waiver. No course of
dealing between the Company and the holder of any Security nor any delay in
exercising any rights hereunder or under any Security shall operate as a
waiver of any rights of any holder of such Security.
17D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES AND WARRANTS.
The Notes and Warrants may be transferred to any Transferee acceptable to
(which acceptance will not be unreasonably withheld by) the Company, provided
that any such
-64-
transfer does not violate any applicable rule or regulation under the
Securities Act or the Exchange Act. The Notes may be transferred in
denominations of at least $1,000,000. The Company shall keep at its
principal office a register in which the Company shall provide for the
registration and transfer of the Warrants. The Company shall keep at its
principal office a register in which the Company shall provide for the
registration and transfer of the Notes. The Notes are issuable as registered
Notes only, each without coupons, in denominations of at least $500,000
(except as may be necessary to reflect any principal amount not evenly
divisible by $500,000). Upon surrender for registration of transfer of any
Note at the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Notes of like tenor and of a
like aggregate principal amount, which Notes shall be registered in the name
of such transferee or transferees. At the option of the holder of any Note
such Note may be exchanged for Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the
Note to be exchanged at the principal office of the Company. Whenever any
Notes are so surrendered for exchange, the Company shall, at its expense,
execute and deliver the Notes which the holder making the exchange is
entitled to receive. Every Note surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or such holder's attorney
duly authorized in writing. Any Note or Notes issued in exchange for any
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, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of
any Note of the loss, theft, destruction or mutilation of such Note and, in
the case of any such loss, theft or destruction, upon receipt of such
holder's unsecured indemnity agreement, or other indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Note, the Company will make and deliver a
new Note, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Note. The Purchasers' unsecured indemnity or that of any Transferee that is
an institution shall be acceptable to the Company.
17E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name
any Note is registered as the owner and holder of such Note for the purpose
of receiving payment of principal of and interest on such Note and for all
other purposes whatsoever, whether or not such Note shall be overdue, and the
Company shall not be affected by notice to the
-65-
contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in all or any
part of such Note to any Person on such terms and conditions as
may be determined by such holder in its sole and absolute
discretion. Any Notes at any time owned or acquired in any
manner by or on behalf of the Company or any Subsidiary of the
Company shall not be deemed to be outstanding for any purpose of
this Agreement and shall be forthwith canceled.
17F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT. All representations and warranties contained
herein or made in writing by or on behalf of the Company or any
of its Subsidiaries in connection herewith shall survive the
execution and delivery of this Agreement and the Securities, the
transfer by the Purchasers of any Security or portion thereof or
interest therein and the payment of any Security, and may be
relied upon by any Transferee, regardless of any investigation
made at any time by or on behalf of the Purchasers or any
Transferee; provided, however, that any claim for a breach of any
representation or warranty set forth herein must be made on or
prior to the expiration of the first anniversary of the repayment
in full of the Notes (together with all accrued interest
thereon). Subject to the preceding sentence, this Agreement, the
Related Agreements and the Securities embody the entire agreement
and understanding between the Purchasers and the Company and
supersede all prior agreements and understandings relating to the
subject matter hereof.
17G. SUCCESSORS AND ASSIGNS. All covenants and other
agreements in this Agreement contained by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto
(including, without limitation, any Transferee) whether or not so
expressed.
17H. CERTAIN RELATIONSHIPS. The Agent and the Lenders
(each as defined in the Credit Agreement) (i) shall be third
party beneficiaries with respect to paragraph 8 of this Agreement
and (ii) are not fiduciaries, agents or representatives of the
Purchasers or any other holder of the Notes.
17I. DISCLOSURE TO OTHER PERSONS. The Company
acknowledges that the holder of any Security may deliver copies
of any financial statements and other documents delivered to such
holder, and disclose any other information disclosed to such
holder, by or on behalf of the Company or its Subsidiaries in
connection with or pursuant to this Agreement to (i) such
holder's directors, officers, employees, agents and professional
consultants, (ii) any other holder of any Security, (iii) any
-66-
Person to which such holder offers to sell such Security or any part thereof,
(iv) any Person to which such holder sells or offers to sell a participation
in all or any part of such Security, (v) any federal or state regulatory
authority having jurisdiction over such holder, or (vi) any other Person to
which such delivery or disclosure may be necessary or appropriate (a) in
compliance with any law, rule, regulation or order applicable to such holder,
(b) in response to any subpoena or other legal process, (c) in connection
with any litigation to which such holder is a party Or (d) in order to
protect such holder's investment in such Security; provided, that any
confidential information so disclosed to any third party may be the subject
of a confidentiality agreement if reasonably requested by the Company.
17J. NOTICES. All communications provided for hereunder shall be sent
by confirmed telecopy, first class mail certified mail (return receipt
requested) or overnight delivery service (with charges prepaid): (i) if to
the Purchasers, addressed to EIT at 00 Xxxxxxxx, Xxxxxx, Xxxxxxx XX0X0XX,
ATTENTION: Company Secretary, and addressed to Associates at 00 Xxxxxxxx,
Xxxxxx, Xxxxxxx XX0X0XX, ATTENTION: Xxxxxx X. Xxxx, or to such other
addresses as the Purchasers may have designated to the Company in writing,
with copies to Electra at 00 Xxxx 00xx Xxxxxx (25th Floor), New York, New
York 10022, ATTENTION: Xxxx X. Xxxxxxxxx, and to Xxxxxxx Xxxx & Xxxxxxxxx,
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, ATTENTION: Xxxxx X. Xxxxxx;
(ii) if to any other holder of any Notes, addressed to such holder at the
registered address of such holder as set forth in the register kept by the
Company at its principal office as provided in paragraph 17D hereof; (iii) if
to any other holder of the Warrants, addressed to such holder at the address
of such holder in the record hooks of the Company; and (iv) if to the
Company, addressed to it at 000 Xxxxxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxx
00000, ATTENTION: R. Xxxx XxXxxxx, or to such other address or addresses as
the Company may have designated in writing to the Purchasers and each other
holder of any of the Securities at the time outstanding, with a copy to Xxxxx &
Xxxxxxxxx, 0000 Xxxxxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, ATTENTION:
Xxxxx Xxxxxxxx.
17K. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
17L. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory or acceptable to any party, the
determination of such satisfaction
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or acceptability shall be made by such party in its sole and
exclusive reasonable judgment (as determined in accordance with
such party's customary legal and business practices) exercised in
good faith.
17M. GOVERNING LAW: JURISDICTION. This Agreement (including, without
limitation, paragraph 14 hereof as it applies to Unidec S.A.) and the
Securities shall be construed and enforced in accordance with, and the rights
of the parties shall be governed by, the law of the State of New York without
reference to such State's conflicts of laws principles. The Company and each
Subsidiary Guarantor hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York and of any
New York state court sitting in New York City (and of the appropriate
appellate courts) for the purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby and
irrevocably waives, to the fullest extent permitted by applicable law, any
objection to venue laid therein. Process in any such proceeding may be
served on such party anywhere in the world, whether within or without the
State of New York (except for Unidec S.A. which must be served at its
principal place of business in Switzerland).
17N. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
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IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the date first above written.
Very truly yours,
XxXXXXX AIRCRAFT HOLDINGS, INC.
By: /s/ R. Xxxx XxXxxxx
------------------------------------
Name: R. Xxxx XxXxxxx
Title: Chief Executive Officer
ELECTRA INVESTMENT TRUST P.L.C.
By:
------------------------------------
Name:
Title:
ELECTRA ASSOCIATES, INC.
By:
------------------------------------
Name:
Title:
The foregoing Agreement is hereby
accepted solely as it relates to
the Subsidiary Guarantees
contained herein as of the date
first above written
SUBSIDIARY GUARANTORS:
XXXX COMPONENTS, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: Treasurer, Chief Financial
Officer & Secretary
XXXX HOLDINGS, INC.
By: /s/ R. Xxxx XxXxxxx
------------------------------------
Name:
Title:
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the date first above written.
Very truly yours,
XxXXXXX AIRCRAFT HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
ELECTRA INVESTMENT TRUST P.L.C.
By: /s/ H.A.L.H. MUMFORD
------------------------------------
Name: H.A.L.H. MUMFORD
Title: Director
ELECTRA ASSOCIATES, INC.
By: /s/ X. X. Xxxxx
------------------------------------
Name: X. X. XXXXX
Title: Director
The foregoing Agreement is hereby
accepted solely as it relates to
the Subsidiary Guarantees
contained herein as of the date
first above written
SUBSIDIARY GUARANTORS:
XXXX COMPONENTS, INC.
By:
------------------------------------
Name:
Title:
XXXX HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
TRI-STAR TECHNOLOGIES
By: Tri-Star Technologies, Inc.,
its General Partner
By: /s/ R. Xxxx XxXxxxx
------------------------------------
Name: R. Xxxx XxXxxxx
Title: Chief Executive Officer
TRI-STAR TECHNOLOGIES, INC.
By: /s/ R. Xxxx Xxxxxxx
------------------------------------
Name: R. Xxxx XxXxxxx
Title: Chief Executive Officer
TRI-STAR ELECTRONICS INTERNATIONAL, INC.
By: /s/ R. Xxxx XxXxxxx
------------------------------------
Name: R. Xxxx XxXxxxx
Title: Chief Executive Officer
TRI-STAR HOLDINGS, INC.
By: /s/ R. Xxxx XxXxxxx
------------------------------------
Name: R. Xxxx XxXxxxx
Title: Chief Executive Officer
UNIDEC S. A.
By:
------------------------------------
Name:
Title:
XXXXXXXXXXX INTERNATIONAL LIMITED
By: /s/ R. Xxxx XxXxxxx
------------------------------------
Name: R. Xxxx XxXxxxx
Title: Chief Executive Officer
XXXXXXXXXXX INTERNATIONAL, INC.
By: /s/ R. Xxxx XxXxxxx
------------------------------------
Name: R. Xxxx XxXxxxx
Title: Chief Executive Officer
TRI-STAR TECHNOLOGIES
By: Tri-Star Technologies, Inc.,
its General Partner
By:
------------------------------------
Name:
Title:
TRI-STAR TECHNOLOGIES, INC.
By:
------------------------------------
Name:
Title:
TRI-STAR ELECTRONICS INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
TRI-STAR HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
UNIDEC S.A.
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Sole Administrator
XXXXXXXXXXX INTERNATIONAL LIMITED
By:
------------------------------------
Name:
Title:
XXXXXXXXXXX INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
EXHIBIT 1(b)
SERIES [A] WARRANT
TO PURCHASE COMMON STOCK
OF
XxXXXXX AIRCRAFT HOLDINGS, INC.
WARRANT NO. [A-1]
NUMBER OF SHARES OF COMMON STOCK: [438,733]
TABLE OF CONTENTS
PAGE
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. EXERCISE OF WARRANT . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1. Manner of Exercise . . . . . . . . . . . . . . . . . . . . . . . 5
2.2. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3. Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . 6
2.4. Continued Validity . . . . . . . . . . . . . . . . . . . . . . . 6
3. TRANSFER, DIVISION AND COMBINATION . . . . . . . . . . . . . . . . . . 6
3.1. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2. Division and Combination . . . . . . . . . . . . . . . . . . . . 7
3.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4. Maintenance of Books . . . . . . . . . . . . . . . . . . . . . . 7
4. ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1. Stock Dividends, Subdivisions and Combinations . . . . . . . . . 8
4.2. Certain Other Distributions . . . . . . . . . . . . . . . . . . 8
4.3. Issuance of Additional Shares of Common Stock . . . . . . . . . 9
4.4. Issuance of Warrants, Options or Other Rights . . . . . . . . . 11
4.5. Issuance of Convertible Securities . . . . . . . . . . . . . . . 11
4.6. Superseding Adjustment . . . . . . . . . . . . . . . . . . . . . 12
4.7. Other Provisions Applicable to Adjustments under this Section. . 13
4.8. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets . . . . . . . . . . . . . . . . . . . . . 15
4.9. Other Action Affecting Common Stock . . . . . . . . . . . . . . 16
4.10. Taking of Record; Stock and Warrant Transfer
Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5. NOTICES TO WARRANT HOLDERS . . . . . . . . . . . . . . . . . . . . . . 17
5.1. Notice of Adjustments . . . . . . . . . . . . . . . . . . . . . 17
5.2. Notice of Certain Corporate Action . . . . . . . . . . . . . . . 17
6. NO IMPAIRMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY . . . . . . . . . . . . . . . . 18
8. PUT RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9. RESTRICTIONS ON TRANSFER . . . . . . . . . . . . . . . . . . . . . . . 19
9.1. Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . 19
9.2. Notice of Proposed Transfers; Requests for Registration . . . . 19
(i)
10. LOSS OR MUTILATION . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11. FINANCIAL AND BUSINESS INFORMATION . . . . . . . . . . . . . . . . . . 20
12. APPRAISAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13. LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . 20
14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.1. Nonwaiver and Expenses . . . . . . . . . . . . . . . . . . . . . 20
14.2. Notice Generally . . . . . . . . . . . . . . . . . . . . . . . . 21
14.3. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 21
14.5. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.6. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 22
14.7. Office of the Company . . . . . . . . . . . . . . . . . . . . . 22
14.8. Information . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.9. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
14.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 23
EXHIBITS:
Exhibit A - Subscription Form
Exhibit B - Assignment Form
(ii)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT
BE OFFERED FOR SALE, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. IN
ADDITION, THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR ENCUMBRANCE OF THE
SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE
SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT, DATED AS OF NOVEMBER 2,
1994, AMONG THE COMPANY AND CERTAIN HOLDERS OF THE COMPANY'S SECURITIES. A
COPY OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER HEREOF TO THE SECRETARY OF THE COMPANY.
SERIES [A] WARRANT
To Purchase Common Stock
Of
XxXXXXX AIRCRAFT HOLDINGS, INC.
THIS IS TO CERTIFY THAT [ELECTRA INVESTMENT TRUST P.L.C., a corporation
organized under the laws of the United Kingdom] [ELECTRA ASSOCIATES, INC., a
corporation organized under the laws of Delaware] ("Electra"), or registered
assigns (such person, together with any permitted transferee, is referred to
herein as the "Holder"), is entitled, beginning on the Effective Date and at
any time prior to the Expiration Date, to purchase from XxXXXXX AIRCRAFT
HOLDINGS, INC., an Ohio corporation (the "Company"), that number of shares of
Common Stock (as defined herein) which shall be initially equal to [438,733]
shares and which is subject to adjustment as provided herein, at a purchase
price equal to the Current Warrant Price, which shall be initially equal to $.01
per share and which is subject to adjustment as provided herein. This Warrant
is issued in connection with the Holder's purchase on the date hereof of certain
of the Company's 12% Senior Subordinated Notes due December 31, 2001, together
with the other warrants referred to in the Securities Purchase Agreement.
Capitalized terms used but not otherwise defined in this Warrant shall have the
meanings ascribed to such terms in the Securities Purchase Agreement.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company after the Closing Date, other than (i) Warrant
Stock, (ii) shares of Common Stock issuable to the holders of the Series B,
Series C and Series D warrants issued in connection with the transactions
contemplated by the Securities Purchase Agreement, (iii) shares of Common
Stock issuable under the Common Stock Purchase Warrant, dated as of November 2,
1994, of the Company in favor of Internationale Nederlanden (U. S.)
Capital Corporation, (iv) shares of Common Stock issuable under the Common
Stock Purchase Warrant, dated as of November 2, 1994, of the Company in favor
of The Provident Bank, (v) shares of Common Stock issuable under the Senior
Subordinate Loan and Warrant Purchase Agreement, dated October 15, 1991, as
amended, among Banc One Capital Partners Corporation, the Company and certain
of its Subsidiaries, (vi) shares of Common Stock issuable upon conversion or
exercise of the Company's convertible preferred stock and warrants outstanding
on the Closing Date and (vii) Common Stock issued to or issuable upon conversion
or exercise of options to directors, officers, employees or consultants of the
Company, provided that the aggregate amount of all such Common Stock shall not
exceed 17.05% of the Common Stock outstanding on a Fully Diluted basis as of
the Closing Date.
"Appraised Value" shall mean, in respect of any share of Common Stock as
of any date herein specified, (y) the price that would be paid for the entire
common equity interest in the Company on a going-concern basis in a single
arms-length transaction between a willing buyer and a willing seller (neither
acting under compulsion), using valuation techniques then prevailing in the
securities industry and always determined in accordance with the valuation
procedures set forth in Section 12, and assuming full disclosure and
understanding of all relevant information and a reasonable period of time for
effectuating such sale, divided by (z) the number of shares of Common Stock
outstanding on a Fully Diluted basis. For purposes of determining the
Appraised Value, (i) the exercise price of options or warrants to acquire
Common Stock which are deemed to have been exercised for the purpose of
determining the number of shares of Common Stock outstanding on a Fully
Diluted basis shall be deemed to have been received by the Company, (ii) the
liquidation preference or indebtedness, as the case may be, represented by
securities which are deemed exercised for or converted into Common Stock for
the purpose of determining the number of shares of Common Stock outstanding
on a Fully Diluted basis, (iii) any contract limitation in respect of the
shares of Common Stock, including their transfer, voting and other rights and
(iv) any illiquidity arising by contract law in respect of the shares of
Common Stock and any voting rights or control
2
rights amongst the shareholders of the Company shall be deemed to have been
eliminated or cancelled.
"Business Day" shall mean any day that is not a Saturday or a Sunday or
a day on which commercial banks are required or authorized to be closed in
the City of New York.
"Closing Date" shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
"Common Stock" shall mean (except where the context otherwise indicates)
the common stock, without par value, of the Company as constituted on the
Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the
Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof which is
also not preferred as to dividends or assets over any other class of stock of
the Company and which is not subject to redemption and (ii) shares of common
stock of any successor or acquiring corporation received by or distributed to
the holders of Common Stock of the Company in the circumstances contemplated
by Section 4.8.
"Company" shall have the meaning set forth in the first paragraph hereof.
"Convertible Securities" shall mean evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable, with or
without payment of additional consideration in cash or property, for
Additional Shares of Common Stock, either immediately or upon the occurrence
of a specified date or a specified event.
"Credit Agreement" shall mean that certain Credit Agreement, dated as of
November 2, 1994, between the Company, the Subsidiary Guarantors named
therein, the Lenders named therein, The Provident Bank (as Cash Management
Agent) and Internationale Nederlanden (U.S.) Capital Corporation (as Agent).
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the greater of (i) net book value per
share of Common Stock as determined by reference to the Company's financial
statements for the most recently ended fiscal quarter, or (ii) a valuation
per share of Common Stock in an amount equal to (y) the product of (A) 5.67
times (B) the Company's EBITDA less Capital Expenditures (each as defined in
the Securities Purchase Agreement) permitted under the Securities Purchase
Agreement, in each event for the twelve-month period preceding the most
recently ended fiscal quarter, with
3
such product reduced by (z) principal amounts outstanding under the Credit
Agreement and the Securities Purchase Agreement, or (iii) the Appraised Value
per share of Common Stock.
"Current Warrant Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date.
"Effective Date" shall mean [November 2, 1994].
"Electra" shall have the meaning set forth in the first paragraph hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Expiration Date" shall mean December 31, 2004.
"Fully-Diluted" shall mean, when used with reference to Common Stock, at
any date as of which the number of shares thereof is to be determined, all
shares of Common Stock outstanding at such date and all shares of Common
Stock issuable in respect of this Warrant increased by all common equivalent
shares issuable at any time pursuant to any stock options, warrants,
convertible securities, and any other security or instrument that could
result in additional common shares being issued at any time in the future,
outstanding on such date.
"GAAP" shall mean generally accepted accounting principles as 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, or statements by
such other entity as have been approved by a significant segment of the
accounting profession, which are in effect from time to time.
"Holder" shall have the meaning set forth in the first paragraph hereof.
"Other Property" shall have the meaning set forth in Section 4.8.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, corporation, limited liability organization,
association, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
4
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement, dated as of November 2, 1994, by and among the Company,
Electra and Electra Associates, Inc., a Delaware corporation.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock or
of any interest in either thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Triggering Event" shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
"Warrant" or "Warrants" shall mean this Warrant and all warrants issued
upon transfer, division or combination, or in exchange or substitution
therefor.
"Warrant Price" shall mean an amount equal to (i) the number of shares
of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.
"Warrant Stock" shall mean the shares of Common Stock received by the
holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. From and after the Effective Date, and until
5:00 P.M. New York time on the Expiration Date, the Holder may exercise this
Warrant, on any Business Day, for all or any part of the number of shares of
Common Stock purchasable hereunder [***delete the following for Series A
Warrants only*** ; provided, however, that if a Triggering Event shall have
occurred prior to the Effective Date this Warrant shall be void as of the date
of occurrence of such Triggering Event].
In order to exercise this Warrant, in whole or in part, the Holder shall
deliver to the Company at its principal office at 000 Xxxxxxxx Xxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxx 00000, or at the office or agency designated by the
Company pursuant to Section 14.7, (i) a written notice of the Holder's
election to exercise this Warrant, which notice shall specify the number of
shares of Common Stock to be purchased, (ii) the Holder's check in payment of
the Warrant Price and (iii) this Warrant. Such
5
notice shall be substantially in the form of the subscription form appearing
at the end of this Warrant as Exhibit A, duly executed by the Holder or its
agent or attorney. Upon receipt thereof, the Company shall, as promptly as
practicable, and in any event within five (5) Business Days thereafter,
execute or cause to be executed and deliver or cause to be delivered to the
Holder a certificate or certificates representing the aggregate number of
full shares of Common Stock issuable upon such exercise, together with cash
in lieu of any fraction of a share, as hereinafter provided. The stock
certificate or certificates so delivered shall be, to the extent possible, in
such denomination or denominations as the Holder shall request and shall be
registered in the name of the Holder or, subject to Section 9, such other
name as shall be designated in the notice.
This Warrant shall be deemed to have been exercised and such certificate
or certificates shall be deemed to have been issued, and the Holder or any
other Person so designated to be named therein shall be deemed to have become
a holder of record of such shares for all purposes, as of the date the
notice, together with the cash or check and this Warrant, is received by the
Company as described above and all taxes, if any, required to be paid prior
to the issuance of such shares have been paid pursuant to Section 2.2. If
this Warrant shall have been exercised in part, the Company shall, at the
time of delivery of the certificate or certificates, deliver to the Holder a
new Warrant evidencing the rights of the Holder to purchase the unpurchased
shares of Common Stock called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant, or, at the request of the
Holder, appropriate notation may be made on this Warrant and the same
returned to the Holder.
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly
issued, fully paid and nonassessable, and the Company shall pay all expenses
in connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issuance or delivery thereof, unless such taxes
or charges are income taxes or otherwise imposed upon income of the Holder.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights
under which are exercised in the same transaction, would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal
6
to the same fraction of the Current Market Price per share of Common Stock on
the date of exercise.
2.4. CONTINUED VALIDITY. A holder of shares of Common Stock issued upon
the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 10, 11
and 14 of this Warrant. The Company will, at the time of each exercise of
this Warrant, in whole or in part, upon the request of the holder of the
shares of Common Stock issued upon such exercise hereof, acknowledge in
writing, in form reasonably satisfactory to such holder, its continuing
obligation to afford to such holder all such rights; provided, however, that
if such holder shall fail to make any such request, such failure shall not
affect the continuing obligation of the Company to afford to such holder all
such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to Section 9, transfer of this Warrant and all
rights hereunder, in whole or in part, shall be registered on the books of
the Company to be maintained for such purpose, upon surrender of this Warrant
at the principal office of the Company referred to in Section 2.1 or the
office or agency designated by the Company pursuant to Section 14.7, together
with a written assignment of this Warrant substantially in the form of
Exhibit B hereto duly executed by the Holder or its agent or attorney. Upon
such surrender, the Company shall, subject to Section 9, execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in such instrument of assignment, and shall issue to
the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned in compliance with Section 9, may be exercised by a new
Holder for the purchase of shares of Common Stock without having a new
Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant may be
divided or combined with other Warrants upon presentation thereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued
and signed by the Holder or its agent or attorney. Subject to Section 3.1
and Section 9, as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
7
3.3. EXPENSES. The Company shall prepare, issue and deliver the new
Warrant or Warrants and pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of such Warrants,
unless such taxes or charges are income taxes or otherwise imposed upon
income of the Holder.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration
of transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, and the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time as
set forth in this Section 4. The Company shall give each Holder notice of
any event which requires an adjustment pursuant to this Section 4 at the time
of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend payable in or to receive any other
distribution of Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record holder
of the same number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the occurrence of such event would own or be
entitled to receive after the occurrence of such event, and (ii) the Current
Warrant Price shall be adjusted to equal the product of (A) the Current
Warrant Price prior to the occurrence of such event multiplied by (B) a
fraction, the numerator of which is the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such adjustment and
the denominator of which is the number of shares for which this Warrant is
exercisable immediately after such adjustment.
8
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall take
a record of the holders of its Common Stock for the purpose of entitling them
to receive any dividend or other distribution of:
(a) cash (other than a regular cash dividend payable out of surplus
or net profits legally available for the payment of dividends under the
laws of the jurisdiction of incorporation of the Company),
(b) any evidences of its indebtedness, any shares of its stock or any
other securities or property of any nature whatsoever (other than
Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants, options or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock or any
other securities or property of any nature whatsoever (other than
Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of (A) the number of
shares of Common Stock for which this Warrant is exercisable immediately
prior to such adjustment multiplied by (B) a fraction, the numerator of which
shall be the Current Market Price per share of Common Stock at the date of
taking such record and the denominator of which shall be such Current Market
Price per share of Common Stock minus the amount allocable to one share of
Common Stock of any such cash so distributable and of the fair value (as
determined pursuant to Section 4.7(a), including as to an opinion from an
investment banking firm) of any and all such evidences of indebtedness,
shares of stock, other than securities or property or warrants or other
subscription or purchase rights so distributable; and (ii) the Current
Warrant Price shall be adjusted to equal (A) the Current Warrant Price
multiplied by (B) a fraction, the numerator of which shall be the number of
shares of Common Stock for which this Warrant is exercisable immediately
prior to the adjustment and the denominator of which shall be the number of
shares for which this Warrant is exercisable immediately after such
adjustment. A reclassification of the Common Stock (other than a change in
par value, or from par value to no par value or from no par value to par
value) into shares of Common Stock and shares of any other class of stock
shall be deemed a distribution by the Company to the holders of its Common
Stock of such shares of such other class of stock within the meaning of this
Section 4.2 and, if the outstanding shares of Common Stock shall be changed
into a larger or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision
9
or combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If at any time
the Company shall (except as hereinafter provided) issue or sell any
Additional Shares of Common Stock, in exchange for consideration in an amount
per Additional Share of Common Stock which is less than the Current Warrant
Price at the time the Additional Shares of Common Stock are issued, then (i)
the Current Warrant Price as to the number of shares for which this Warrant
is exercisable prior to such adjustment shall be reduced to a price
determined by dividing (A) an amount equal to the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Current Warrant Price plus (y) the
consideration, if any, received by the Company upon such issue or sale, by
(B) the total number of shares of Common Stock outstanding immediately after
such issue or sale; and (ii) the number of shares of Common Stock for which
this Warrant is exercisable shall be adjusted to equal the product of (A) the
Current Warrant Price in effect immediately prior to such issue or sale
multiplied by (B) the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to such issue or sale, and dividing the
product thereof by the Current Warrant Price resulting from the adjustment
made pursuant to clause (i) above.
(b) If at any time the Company shall (except as hereinafter provided)
issue or sell any Additional Shares of Common Stock, in exchange for
consideration in an amount per Additional Share of Common Stock which is less
than the Current Market Price at the time the Additional Shares of Common
Stock are issued, then (i) the number of shares of Common Stock for which
this Warrant is exercisable shall be adjusted to equal the product of (A) the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale multiplied by (B) a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after such issue or sale and the denominator of which shall be
the sum of (x) number of shares of Common Stock outstanding immediately prior
to such issue or sale plus (y) the number of shares which the aggregate
offering price of the total number of such Additional Shares of Common Stock
would purchase at the then Current Market Price; and (ii) the Current Warrant
Price as to the number of shares for which this Warrant is exercisable prior
to such adjustment shall be adjusted by multiplying (A) such Current Warrant
Price by (B) a fraction, the numerator of which shall be the number of shares
for which this Warrant is exercisable immediately prior to such issue or sale
and the denominator of which shall be the number of shares of Common
10
Stock for which this Warrant is exercisable immediately after such issue or
sale.
(c) If at any time the Company (except as hereinafter provided) shall
issue or sell any Additional Shares of Common Stock, in exchange for
consideration in an amount per Additional Share of Common Stock which is less
than the Current Warrant Price and the Current Market Price at the time the
Additional Shares of Common Stock are issued, the adjustment required under
this Section 4.3 shall be made in accordance with the formula in paragraph
(a) or (b) above which results in the lower Current Warrant Price following
such adjustment. The provisions of paragraphs (a) and (b) of Section 4.3
shall not apply to any issuance of Additional Shares of Common Stock for
which an adjustment is provided under Section 4.1 or Section 4.2. No
adjustment of the number of shares of Common Stock for which this Warrant
shall be exercisable shall be made under paragraph (a) or (b) of this Section
4.3 upon the issuance of any Additional Shares of Common Stock which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights or pursuant to the exercise of any conversion or exchange
rights in any Convertible Securities, if any such adjustment shall previously
have been made upon the issuance of such warrants or other rights or upon the
issuance of such Convertible Securities (or upon the issuance of any warrant
or other rights therefor) pursuant to Section 4.4 or Section 4.5.
4.4. ISSUANCE OF WARRANTS, OPTIONS OR OTHER RIGHTS. If at any time the
Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a distribution of, or shall in any
manner (whether directly or by assumption in a merger in which the Company is
the surviving corporation) issue or sell, any warrants, options or other
rights to subscribe for or purchase any Additional Shares of Common Stock or
any Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such warrants, options or other
rights or upon conversion or exchange of such Convertible Securities shall be
less than the Current Warrant Price or the Current Market Price in effect
immediately prior to such issue or sale, then the number of shares for which
this Warrant is exercisable and the Current Warrant Price shall be adjusted
as provided in Section 4.3 on the basis that the maximum number of Additional
Shares of Common Stock issuable pursuant to all such warrants, options or
other rights or necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and outstanding
and the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such warrants, options
or other rights. No
11
further adjustment of the Current Warrant Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise of
such warrants, options or other rights or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Current Warrant Price or Current Market Price
in effect immediately prior to the time of such issue or sale, then the
number of Shares for which this Warrant is exercisable and the Current
Warrant Price shall be adjusted as provided in Section 4.3 on the basis that
the maximum number of Additional Shares of Common Stock necessary to effect
the conversion or exchange of all such Convertible Securities shall be deemed
to have been issued and outstanding and the Company shall have received all
of the consideration payable therefor, if any, as of the date of actual
issuance of such Convertible Securities. No adjustment of the number of
shares for which this Warrant is exercisable and the Current Warrant Price
shall be made under this Section 4.5 upon the issuance of any Convertible
Securities which are issued pursuant to the exercise of any warrants, options
or other subscription or purchase rights therefor, if any such adjustment
shall previously have been made upon the issuance of such warrants, options
or other rights pursuant to Section 4.4. No further adjustments of the
number of Shares for which this Warrant is exercisable and the Current
Warrant Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and, if any issue or
sale of such Convertible Securities is made upon exercise of any warrant,
option or other right to subscribe for or to purchase any such Convertible
Securities for which adjustments of the number of Shares for which this
Warrant is exercisable and the Current Warrant Price have been or are to be
made pursuant to other provisions of Section 4, no further adjustments of the
number of Shares for which this Warrant is exercisable and the Current
Warrant Price shall be made by reason of such issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the number of shares of Common Stock for which this Warrant is exercisable
and of the Current Warrant Price shall have been made pursuant to Section 4.4
or Section 4.5 as the result of any issuance of warrants, options, rights or
12
Convertible Securities, such warrants, options or rights, or the right of
conversion or exchange of such Convertible Securities, shall expire, and all
or a portion of such warrants, options or rights, or the right of conversion
or exchange with respect to all or a portion of such other Convertible
Securities, as the case may be, shall not have been exercised, than such
previous adjustment shall be rescinded and annulled and the Additional Shares
of Common Stock which were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of such warrants,
options or rights or Convertible Securities on the basis of (a) treating the
number of Additional Shares of Common Stock or other property, if any,
theretofore actually issued or issuable pursuant to the previous exercise of
any such warrants, options or rights or any such right of conversion or
exchange, as having been issued on the date or dates of any such exercise and
for the consideration actually received and receivable therefor, and (b)
treating any such warrants, options or rights or any such Convertible
Securities which then remain outstanding as having been granted or issued
immediately after the time of such increase of the consideration per share
for which shares of Common Stock or other property are issuable under such
warrants, options or rights or other Convertible Securities, whereupon a new
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price shall be made, which new adjustment
shall supersede the previous adjustment so rescinded and annulled.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and
the Current Warrant Price provided for in this Section 4:
(a) COMPUTATION OF CONSIDERATION. To the extent that any Additional
Shares of Common Stock or any Convertible Securities or any warrants, options
or other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for cash consideration,
the consideration received by the Company therefor shall be the amount of the
cash received by the Company, or, if such Additional Shares of Common Stock
or Convertible Securities are offered by the Company for subscription, the
subscription price, or, if such Additional Shares of Common Stock or
Convertible Securities are sold to underwriters or dealers for public
offering without a subscription offering, the public offering price (in any
such case subtracting any amounts paid or receivable for accrued interest or
accrued dividends and without
13
taking into account any compensation, discounts or expenses paid or incurred
by the Company for and in the underwriting of, or otherwise in connection
with, the issuance thereof). To the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise expressly
provided, the amount of such consideration shall be deemed to be the fair
value of such consideration at the time of such issuance as determined in
good faith by the Board of Directors of the Company. In case any Additional
Shares of Common Stock or any Convertible Securities or any warrants, options
or other rights to subscribe for or purchase such Additional Shares of Common
Stock or Convertible Securities shall be issued in connection with any merger
in which the Company issues any securities, the amount of consideration
therefor shall be deemed to be the fair value, as determined in good faith by
the Board of Directors of the Company, of such portion of the assets and
business of the nonsurviving corporation as such Board in good faith shall
determine to be attributable to such Additional Shares of Common Stock,
Convertible Securities, warrants, options or other rights, as the case may
be. The consideration for any Additional Shares of Common Stock issuable
pursuant to any warrants, options or other rights to subscribe for or
purchase the same shall be the consideration received by the Company for
issuing such warrants, options or other rights plus the additional
consideration payable to the Company upon exercise of such warrants, options
or other rights. The consideration for any Additional Shares of Common Stock
issuable pursuant to the terms of any Convertible Securities shall be the
consideration received by the Company for issuing warrants, options or other
rights to subscribe for or purchase such Convertible Securities, plus the
consideration paid or payable to the Company in respect of the subscription
for or purchase of such Convertible Securities, plus the additional
consideration, if any, payable to the Company upon the exercise of the right
of conversion or exchange of such Convertible Securities. In case of the
issuance at any time of any Additional Shares of Common Stock or Convertible
Securities in payment or satisfaction of any dividends upon any class of
stock other than Common Stock, the Company shall be deemed to have received
for such Additional Shares of Common Stock or Convertible Securities a
consideration equal to the amount of such dividend so paid or satisfied.
Whenever the Board of Directors of the Company shall be required to make a
determination in good faith of the fair value of any consideration, such
determination shall, if requested by the Holder, be supported by an opinion
of an investment banking firm selected by the Company and reasonably
acceptable to such Holder (or, if more than one Warrant is outstanding, by
holders of a majority of the Warrant Stock issuable upon exercise of the
Warrants).
14
(b) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number
of shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision
or combination of shares of the Common Stock, as provided for in Section 4.1)
up to, but not beyond the date of exercise if such adjustment either by
itself or with other adjustments not previously made adds or subtracts less
than 1% of the shares of Common Stock for which this Warrant is exercisable
immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount (except as aforesaid)
which is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 4 and
not previously made, would result in a minimum adjustment or on the date of
exercise. For the purpose of any adjustment, any specified event shall be
deemed to have occurred at the close of business on the date of its
occurrence.
(c) FRACTIONAL INTERESTS. In computing adjustments under this Section
4, fractional interests in Common Stock shall be taken into account to the
nearest 1/10th of a share.
(d) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a record
of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(e) ESCROW OF WARRANT STOCK. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the
event for which such record is taken, and the Holder exercises this Warrant,
any Additional Shares of Common Stock issuable upon exercise by reason of
such adjustment shall be deemed the last shares of Common Stock for which
this Warrant is exercised (notwithstanding any other provision to the
contrary herein) and such shares or other property shall be held in escrow
for the Holder by the Company to be issued to the Holder upon and to the
extent that the event actually takes place, upon payment of the then Current
Warrant Price. Notwithstanding any other provision to the contrary herein, if
the event for which such record was taken fails to occur or is
15
rescinded, then such escrowed shares shall be cancelled by the Company and
escrowed property returned.
(f) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board of
Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such determination
may be challenged in good faith by the Holder, and any dispute shall be
resolved by an investment banking firm selected by the Company and reasonably
acceptable to such Holder (or, if more than one Warrant is outstanding, to
holders of a majority of Warrant Stock issuable upon exercise of the
Warrants).
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where there is a change in or distribution with respect to the
Common Stock of the Company other than a subdivision, combination or exchange
otherwise provided for herein), or sell, transfer or otherwise dispose of all
or substantially all its property, assets or business to another corporation
and, pursuant to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common stock of
the successor or acquiring corporation (herein referred to as "Other
Property"), are to be received by or distributed to the holders of Common
Stock of the Company, then each Holder shall have the right thereafter to
receive, upon exercise of such Warrant, the number of shares of common stock
of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as a result of
such reorganization, reclassification, merger, consolidation or disposition
of assets by a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such event. In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of
each and every term and condition of this Warrant to be performed and
observed by the Company and all the obligations and liabilities hereof,
subject to such modifications as may be deemed appropriate (as determined in
good faith by resolution of the Board of Directors of the Company) in order
to provide for adjustments of shares of the Common Stock for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to
the adjustments provided for in this Section 4.
16
For purposes of this Section 4.8 "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is
not preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event,
and any warrants, options or other rights to subscribe for or purchase any
such stock. The foregoing provisions of this Section 4.8 shall similarly
apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.9. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock
which give rise to antidilution adjustments under any option, warrant,
convertible security or other right to acquire Common Stock, whether
outstanding at the Closing Date or hereafter issued and together with any
agreements related thereto, but excluding antidilution or other adjustment
rights with respect to the Banc One Warrant or the Warrants, then the Company
will promptly make proportional, equitable and corresponding adjustments in
the number of shares of Common Stock issuable upon exercise of the Warrants
to protect the holders thereof against dilution as a result of such events.
4.10. TAKING OF RECORD: STOCK AND WARRANT TRANSFER BOOKS. In the case
of all dividends or other distributions by the Company to the holders of its
Common Stock with respect to which any provision of Section 4 refers to the
taking of a record of such holders, the Company will in each such case take
such a record and will take such record as of the close of business on a
Business Day. The Company will not at any time close its stock transfer
books or warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of this Warrant,
shall be adjusted pursuant to Section 4, the Company shall forthwith prepare
a certificate to be executed by the chief financial officer of the Company
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated
and specifying the Current Warrant Price and the number of shares of Common
Stock for which this Warrant is exercisable after giving effect to such
adjustment or
17
change. The Company shall promptly cause a signed copy of such certificate
to be delivered to the Holder in accordance with Section 14.2. The Company
shall keep at its office or agency designated pursuant to Section 14.7 copies
of all such certificates and cause the same to be available for inspection at
said office during normal business hours by the Holder or any prospective
purchaser of a Warrant designated by the Holder thereof.
5.2. NOTICE OF CERTAIN CORPORATE ACTION. The Holder shall be entitled
to the same rights to receive notice of corporate action as any holder of
Common Stock.
6. NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its articles of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in
the taking of all such actions as may be necessary or appropriate to protect
the rights of the Holder against impairment. Without limiting the generality
of the foregoing, the Company will take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock upon the exercise of this
Warrant.
Upon the request of the Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form
satisfactory to the Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK: REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company shall at all times reserve and keep available for issuance
upon the exercise of this Warrant such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full
of all outstanding warrants. The Company covenants that all shares of Common
Stock which shall be so issuable, when issued upon exercise of any Warrant
and payment therefor in accordance with the terms of such Warrant, shall be
duly and validly issued and fully paid and nonassessable.
18
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of the Warrants, the Company shall take
any and all corporate action which may be necessary in order that the Company
may validly and legally issue fully paid and nonassessable shares of such
Common Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in
the Current Warrant Price, the Company shall obtain all authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any
governmental authority under any federal or state law (otherwise than as
provided in Section 9) before such shares may be so issued, the Company will
in good faith, as expeditiously as possible and at its own expense, endeavor
to cause such shares to be duly registered or qualified, as the case may be.
8. PUT RIGHTS
The Holder shall have the right to require the Company to repurchase all
or any portion of the Warrants held by the Holder upon the terms and as
provided in paragraph 16C of the Securities Purchase Agreement.
9. RESTRICTIONS ON TRANSFER
The Warrants and the Warrant Stock may not be transferred or assigned
before satisfaction of the conditions specified in this Section 9, which are
intended to ensure compliance with the provisions of the Securities Act with
respect to the Transfer of any Warrant or any Warrant Stock. The Holder, by
acceptance of this Warrant, agrees to be bound by the provisions of this
Section 9.
9.1. RESTRICTIVE LEGEND. This Warrant, and all shares of Warrant Stock
issued upon exercise hereof, shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT
BE OFFERED FOR SALE, SOLD OR TRANSFERRED IN THE ABSENCE OF AN
19
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION
THEREFROM UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION.
Prior to any Transfer of any Warrant, the holder of such Warrant shall give
five days' prior written notice (a "Transfer Notice") to the Company of such
holder's intention to effect such Transfer, including a description of the
manner and circumstances of the proposed Transfer and, if requested by the
Company, an opinion from counsel to such holder that the proposed Transfer of
such Warrant may be effected without registration under the Securities Act.
After delivery of the Transfer Notice, the holder shall be entitled to
Transfer such Warrant in accordance with the terms of the Transfer Notice.
Each Warrant issued upon such Transfer shall bear the restrictive legend set
forth in Section 9.1, unless such legend is not required in order to ensure
compliance with the Securities Act.
10. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and, in case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (it being understood and agreed that
the written agreement of Electra Investment Trust P.L.C. and subsequent
institutional transferees, if any, shall be sufficient indemnity) and, in
case of mutilation, upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor in replacement.
11. FINANCIAL AND BUSINESS INFORMATION
The Company will deliver or cause to be delivered to each Holder,
as provided in paragraph 6A of the Securities Purchase Agreement, certain
financial information, financial analyses, notices, reports, statements and
certificates, all to the extent and in the manner provided therein.
12. APPRAISAL
The determination of Appraised Value shall be a determination
(which shall be final and binding on the parties) made (i) by agreement among
the Company and the Purchasers within thirty (30) days following the event
requiring such determination or (ii) in the absence of such an agreement, by
an Appraiser (as defined below) selected as set forth below. If required, an
20
Appraiser shall be selected within ten (10) days following the expiration of
the 30-day period referred to above, either by agreement among the Company
and the Purchasers or, in the absence of such agreement, by lot from a list
of four potential Appraisers remaining after the Company nominates three, the
Purchasers nominate three, and each side eliminates one potential Appraiser.
The Appraiser shall be instructed by the Company and the Purchasers to make
its determination within thirty (30) days of its selection. All fees and
expenses of an Appraiser selected hereunder shall be borne solely by the
Company. As used herein, "Appraiser" shall mean a nationally recognized
investment banking firm.
13. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of such
Holder for the purchase price of any Common Stock or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
14. MISCELLANEOUS
14.1. NONWAIVER AND EXPENSES. No course of dealing or any delay
or failure to exercise any right hereunder on the part of the Holder shall
operate as a waiver of such right or otherwise prejudice the Holder's rights,
powers or remedies. If the Company fails to make, when due, any payments
provided for hereunder, or fails to comply with any provision of this
Warrant, the Company shall pay to the Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, incurred by the Holder in collecting any amounts
due pursuant hereto or in otherwise enforcing any of its rights, powers or
remedies hereunder.
14.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged
or sent by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of the Company maintained for such
purpose;
21
(b) If to the Company at:
XxXxxxx Aircraft Holdings, Inc.
000 Xxxxxxxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxx 00000
Attention: R. Xxxx XxXxxxx
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, or three (3) Business
Days after the same shall have been postmarked in the United States mail.
14.3. VOTING. To the extent permitted by applicable law, the
Warrants shall entitle the Holder to vote with the Common Stock of the
Company that number of votes equal to the number of shares of Common Stock
issuable from time to time upon exercise of this Warrant on any matters upon
which the holders of Common Stock are entitled to vote [***delete the following
for Series A Warrants only*** ; provided, however, that solely for purposes of
this Section 14.3, the Effective Date shall be deemed to be the date of issue
of this Warrant].
14.4. INDEMNIFICATION. The Company agrees to indemnify and hold
harmless the Holder from and against any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys'
fees, expenses and disbursements of any kind which may be imposed upon,
incurred by or asserted against the Holder in any manner relating to or
arising out of (i) the Holder's exercise of this Warrant and/or ownership of
any shares of Warrant Stock issued in connection therewith, or (ii) any
litigation to which the Holder is made a party in its capacity as a
stockholder of the Company; provided, however, that the Company will not be
liable hereunder to the extent that any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys'
fees, expenses or disbursements are found in a final non-appealable judgment
by a court to have resulted from the Holder's gross negligence, bad faith or
willful misconduct in its capacity as a stockholder or warrantholder of the
Company.
14.5. REMEDIES. Each holder of this Warrant and any Warrant Stock
issuable upon exercise of this Warrant, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under Section 9 of this
Warrant. The
22
Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of Section 9
of this Warrant and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
14.6. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure
to the benefit of and be binding upon the successors of the Company and the
successors and assigns of Electra or any other holder hereof. The provisions
of this Warrant are intended to be for the benefit of all holders from time
to time of this Warrant, and shall be enforceable by any such holder.
14.7. OFFICE OF THE COMPANY. As long as any of the Warrants
remain outstanding, the Company shall maintain an office or agency (which may
be the principal executive offices of the Company) where the Warrants may be
presented for exercise, registration of transfer, division or combination as
provided in this Warrant.
14.8. INFORMATION. The Company shall cooperate with each Holder
of a Warrant and each holder of Warrant Stock in supplying such information
as may be reasonably requested by such holder to comply with any filings or
information reporting forms presently or hereafter required as a condition to
the availability of an exemption from the Securities Act for the sale of any
Warrant or Warrant Stock.
14.9. AMENDMENT. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the
Holder (or, if there is more than one Warrant outstanding, to holders of a
majority of the Warrant Stock issuable upon exercise of the Warrants).
14.10. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Warrant.
14.11. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
23
14.12. GOVERNING LAW. This Warrant shall be governed by the laws
of the State of New York, without regard to the provisions thereof relating
to conflict of laws.
24
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary.
Date of Issuance: November 2, 1994
XxXXXXX AIRCRAFT HOLDINGS, INC.
By:
-------------------------------------
Name: R. Xxxx XxXxxxx
Title: Chief Executive Officer
Attest:
By:
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Secretary
25
Exhibit 1(a)
XxXXXXX AIRCRAFT HOLDINGS, INC.
12% SENIOR SUBORDINATED NOTE DUE DECEMBER 31, 0000
Xx._____ Xxx Xxxx, Xxx Xxxx
$________________ November __, 1994
FOR VALUE RECEIVED, the undersigned, XxXXXXX AIRCRAFT HOLDINGS,
INC. (herein called the "Company"), a corporation organized and existing
under the laws of the State of Ohio, hereby promises to pay to ELECTRA
INVESTMENT TRUST P.L.C. [ELECTRA ASSOCIATES, INC.], or registered assigns,
the principal sum of___________________________________________________________
DOLLARS ($________________) on December 31, 2001, with interest (computed on
the basis of a 360-day year of twelve 30-day months) on the unpaid balance
thereof at the rate of 12% per annum from the date hereof, payable
semi-annually on the last day of June and December in each year, commencing
with the last day of the December next succeeding the date hereof, until the
principal hereof shall have become due and payable, and on the maturity date
hereof. Capitalized terms used but not otherwise defined in this Note shall
have the respective meanings ascribed thereto in the Securities Purchase
Agreement, dated as of November___, 1994, as may be amended from time to time
(the "Agreement"), among the Company and the original purchasers of the Notes.
Payments of principal and interest are to be made in lawful money
of the United States of America, in the manner provided in the Agreement.
This Note is one of a series of Senior Subordinated Notes (herein
called the "Notes") issued pursuant to the Agreement, and is entitled to the
benefits thereof. As provided in the Agreement, this Note is subject to
prepayment, in whole or from time to time in part.
This Note is a registered Note and, as provided and subject to the
limitations contained in the Agreement, upon surrender of this Note for
registration of transfer, duly 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 shall
treat the person in whose name this
-1-
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 guaranteed by the Subsidiary Guarantors, as provided
in the Agreement. Reference is made to the Agreement for a description of
the obligations of the Subsidiary Guarantors and the rights of the holder of
this Note with respect thereto.
The payment of this Note is subordinated to the prior payment of
Senior Debt, as provided in the Agreement. This Note shall rank senior in
right of payment to all other subordinated indebtedness of the Company, as
provided in the Agreement.
This Note shall bear interest on the unpaid balance hereof as set
forth above; provided, however, that the rate of interest will in no event be
in excess of the maximum rate of interest permitted under applicable law.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement. In addition, the
original purchasers of the Notes may be entitled to Penalty Warrants
exercisable for Common Stock of the Company, as provided in the Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the law of such State.
XxXXXXX AIRCRAFT HOLDINGS, INC.
By:
-------------------------------------
Name: R. Xxxx XxXxxxx
Title: President
-2-
XxXXXXX AIRCRAFT HOLDINGS, INC.
12% SENIOR SUBORDINATED NOTE DUE DECEMBER 31, 2001
No. 1 New York, New York
$6,115,973.00 November 2, 1994
FOR VALUE RECEIVED, the undersigned, XxXXXXX AIRCRAFT HOLDINGS,
INC. (herein called the "Company"), a corporation organized and existing
under the laws of the State of Ohio, hereby promises to pay to ELECTRA
INVESTMENT TRUST P.L.C., or registered assigns, the principal sum of SIX
MILLION ONE HUNDRED FIFTEEN THOUSAND NINE HUNDRED SEVENTY-THREE DOLLARS
($6,115,973.00) on December 31, 2001, with interest (computed on the basis of
a 360-day year of twelve 30-day months) on the unpaid balance thereof at the
rate of 12% per annum from the date hereof, payable semi-annually on the last
day of June and December in each year, commencing with the last day of the
December next succeeding the date hereof, until the principal hereof shall
have become due and payable, and on the maturity date hereof. Capitalized
terms used but not otherwise defined in this Note shall have the respective
meanings ascribed thereto in the Securities Purchase Agreement, dated as of
November 2, 1994, as may be amended from time to time (the "Agreement"),
among the Company and the original purchasers of the Notes.
Payments of principal and interest are to be made in lawful money
of the United States of America, in the manner provided in the Agreement.
This Note is one of a series of Senior Subordinated Notes (herein
called the "Notes") issued pursuant to the Agreement, and is entitled to the
benefits thereof. As provided in the Agreement, this Note is subject to
prepayment, in whole or from time to time in part.
This Note is a registered Note and, as provided and subject to the
limitations contained in the Agreement, upon surrender of this Note for
registration of transfer, duly 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 shall
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 guaranteed by the Subsidiary Guarantors, as provided
in the Agreement. Reference is made to the Agreement for a description of
the obligations of the Subsidiary Guarantors and the rights of the holder of
this Note with respect thereto.
The payment of this Note is subordinated to the prior payment of
Senior Debt, as provided in the Agreement. This Note shall rank senior in
right of payment to all other subordinated indebtedness of the Company, as
provided in the Agreement.
This Note shall bear interest on the unpaid balance hereof as set
forth above; provided, however, that the rate of interest will in no event be
in excess of the maximum rate of interest permitted under applicable law.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement. In addition, the
original purchasers of the Notes may be entitled to Penalty Warrants
exercisable for Common Stock of the Company, as provided in the Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the law of such State.
XxXXXXX AIRCRAFT HOLDINGS, INC.
By: /s/ R. Xxxx XxXxxxx
-------------------------------------
Name: R. Xxxx XxXxxxx
Title: Chief Executive Officer
-2-
XxXXXXX AIRCRAFT HOLDINGS, INC.
12% SENIOR SUBORDINATED NOTE DUE DECEMBER 31, 2001
No. 2 New York, New York
$884,027.00 November 2, 1994
FOR VALUE RECEIVED, the undersigned, XxXXXXX AIRCRAFT HOLDINGS,
INC. (herein called the "Company"), a corporation organized and existing
under the laws of the State of Ohio, hereby promises to pay to ELECTRA
ASSOCIATES, INC., or registered assigns, the principal sum of EIGHT HUNDRED
EIGHTY-FOUR THOUSAND TWENTY-SEVEN DOLLARS ($884,027.00) on December 31, 2001,
with interest (computed on the basis of a 360-day year of twelve 30-day
months) on the unpaid balance thereof at the rate of 12% per annum from the
date hereof, payable semi-annually on the last day of June and December in
each year, commencing with the last day of the December next succeeding the
date hereof, until the principal hereof shall have become due and payable,
and on the maturity date hereof. Capitalized terms used but not otherwise
defined in this Note shall have the respective meanings ascribed thereto in
the Securities Purchase Agreement, dated as of November 2, 1994, as may be
amended from time to time (the "Agreement"), among the Company and the
original purchasers of the Notes.
Payments of principal and interest are to be made in lawful money
of the United States of America, in the manner provided in the Agreement.
This Note is one of a series of Senior Subordinated Notes (herein
called the "Notes") issued pursuant to the Agreement, and is entitled to the
benefits thereof. As provided in the Agreement, this Note is subject to
prepayment, in whole or from time to time in part.
This Note is a registered Note and, as provided and subject to the
limitations contained in the Agreement, upon surrender of this Note for
registration of transfer, duly 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 shall
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 guaranteed by the Subsidiary Guarantors, as provided
in the Agreement. Reference is made to the Agreement for a description of
the obligations of the Subsidiary Guarantors and the rights of the holder of
this Note with respect thereto.
The payment of this Note is subordinated to the prior payment of
Senior Debt, as provided in the Agreement. This Note shall rank senior in
right of payment to all other subordinated indebtedness of the Company, as
provided in the Agreement.
This Note shall bear interest on the unpaid balance hereof as set
forth above; provided, however, that the rate of interest will in no event be
in excess of the maximum rate of interest permitted under applicable law.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement. In addition, the
original purchasers of the Notes may be entitled to Penalty Warrants
exercisable for Common Stock of the Company, as provided in the Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the law of such State.
XxXXXXX AIRCRAFT HOLDINGS, INC.
By: /s/ R. Xxxx XxXxxxx
-------------------------------------
Name: R. Xxxx XxXxxxx
Title: Chief Executive Officer
-2-
EXECUTION COPY
AMENDMENT NO. 1
TO SECURITIES PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT, dated as of
February 20, 1996 (this "AMENDMENT") is made among XxXXXXX AIRCRAFT HOLDINGS,
INC. (the "COMPANY"), ELECTRA INVESTMENT TRUST P.L.C. ("EIT") and ELECTRA
ASSOCIATES, INC. ("ASSOCIATES" and, together with EIT, the "PURCHASERS").
W I T N E S S E T H :
WHEREAS, the Company, EIT and Associates are parties to that
certain Securities Purchase Agreement, dated as of November 2, 1994 (as
amended, supplemented or otherwise modified from time to time, the
"SECURITIES PURCHASE AGREEMENT");
WHEREAS, the Company has requested that the Purchasers amend the
Securities Purchase Agreement and waive compliance with certain provisions of
the Securities Purchase Agreement as set forth herein; and
WHEREAS, the Purchasers are willing to so amend and waive
compliance with certain provisions of the Securities Purchase Agreement, but
only upon the terms and subject to the conditions contained herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, the Company, EIT and Associates hereby agree as
follows:
Section 1. DEFINITIONS. Unless otherwise defined herein,
capitalized terms used in this Amendment have the meanings provided in the
Securities Purchase Agreement.
Section 2. AMENDMENTS AND WAIVERS. Subject to satisfaction of the
conditions precedent set forth herein, and effective as of the Effective Date
(as defined herein), the Securities Purchase Agreement shall be amended, and
compliance with certain provisions of the Securities Purchase Agreement shall
be waived, as follows:
2.1. NEW DEFINITIONS. Section 13 of the Securities Purchase
Agreement is hereby amended by inserting the following definitions in their
alphabetically appropriate places:
"'APPLICABLE ANNUALIZATION FACTOR' shall mean: (a) for the fiscal
quarter ended March 31, 1996, 4.0; (b) for the fiscal quarter ended June 30,
1996, 2.0; and (c) for the fiscal quarter ended September 30, 1996, 1.33."
"'XXXX PURCHASE AGREEMENT' shall mean the Stock Purchase Agreement,
dated January 1, 1995, between the Company, Xxxx and Xxxxx Xxxxxxx."
"'XXXX REPURCHASE' shall mean the purchase by the Company from
Xxxxx Xxxxxxx of 25% of the outstanding capital stock of Xxxx pursuant to the
Xxxx Purchase Agreement."
"'NASSAU' shall mean Nassau Capital Partners L.P., a Delaware
limited partnership, and NAS Partners I L.L.C., a Delaware limited liability
company."
"'NASSAU EQUITY INFUSION' shall mean the purchase by Nassau for
cash, on or about the date of Amendment No 1 hereto, of shares of preferred
stock of the Company and the Nassau Warrants for a purchase price equal to
$6,500,000 pursuant to the Nassau Purchase Agreement."
"'NASSAU/XXXXXXX DEAL COSTS' shall mean all costs and expenses
incurred by the Company and its subsidiaries in connection with the
transactions contemplated by the Nassau Purchase Agreement and the Xxxx
Purchase Agreement."
"'NASSAU PURCHASE AGREEMENT' shall mean the Securities; Purchase
Agreement dated as of February 20, 1996 among the Company and Nassau, as in
existence on such date."
"'NASSAU WARRANTS' shall mean the warrants to be acquired by Nassau
pursuant to the terms of the Nassau Purchase Agreement."
2.2. AMENDMENTS TO DEFINITIONS. (a) The definition of "EBITDA" is
hereby amended by replacing the second parenthetical phrase therein with the
following:
"(including, without limitation, (x) amortization of intangibles,
(y) amortization of Deal Costs (to the extent that such Deal Costs
do not exceed $2,500,000) and (z) amortization of Nassau/Xxxxxxx
Deal Costs (to the extent that such Nassau/Xxxxxxx Deal Costs do not
exceed $600,000) and legal expenses incurred prior to February 20,
1996 in connection with a derivative action against the Company and
certain of its subsidiaries maintained by Xxxxx Xxxxxxx on behalf of
Xxxx (to the extent that such legal expenses do not exceed
$350,000))".
(b) The definition of "EBITDA Ratio" is hereby amended by adding
the following proviso immediately prior to the end of such definition:
"; provided, that with respect to any date prior to December 31,
1996, 'EBITDA Ratio' shall mean the ratio of (a) all Debt of the
Company and the Subsidiary
-2-
Guarantors at such time to (b) the product of (x) EBITDA for the
period commencing on January 1, 1996 and ending on the fiscal
quarter ending on or most recently ended prior to such date and (y)
the Applicable Annualization Factor".
(c) The definition of "Fixed Charges Ratio" is hereby amended by
deleting the parenthetical in clause "(a)" thereof and adding the following
proviso immediately prior to the end of such definition:
"; provided, that with respect to any date prior to December 31,
1996, 'Fixed Charges Ratio' shall mean the ratio of (x) Cash Flow
for the period commencing on January 1, 1996 and ending on the
fiscal quarter ending on or most recently ended prior to such date
to (y) Debt Service for such period".
(d) The definition of "Interest Expense" is hereby amended by
relettering the existing clause "(b)" thereof as clause "(c)", deleting the
word "and" at the end of clause "(a)" and by adding the following new clause
"(b)":
"(b) the aggregate amount payable by the Company pursuant to
Section 11.09 of the Credit Agreement (whether or not actually
paid) during such period, and".
(e) The definition of "Net Worth" is hereby amended by replacing
clause "(e)" thereof in its entirety with the following:
" (e) the value ascribed to the Warrants, the Additional
Warrants and the Nassau Warrants and the cumulative effect of any
change in the valuation of the Warrants, the Additional Warrants
and the Nassau Warrants, plus".
2.3. NO LIMIT ON XXXX OBLIGATIONS. (a) The parenthetical in the
definition of "Subsidiary Guarantors" is hereby deleted.
(b) The proviso at the end of the first sentence of Section 14H is
hereby deleted.
(c) Section 14I is hereby deleted in its entirety.
2.4. XXXX REPURCHASE. (a) The Purchasers hereby waive the
provisions of Sections 7B, 7C, 7E, 7F and 7G of the Securities Purchase
Agreement to the extent necessary to permit the Xxxx Repurchase.
(b) Section 7C of the Securities Purchase Agreement is hereby
amended by adding the following at the end thereof:
-3-
"; provided, further, that nothing contained in this paragraph 7C
shall prevent the Company from purchasing capital stock of Xxxx
pursuant to the Xxxx Purchase Agreement".
(c) Section 7B of the Securities Purchase Agreement is hereby amended by
renumbering the existing clause "(vi)" as clause "(vii)", by deleting the
word "and" at the end of clause (v), and by adding the following new clause
(vi) thereto:
" (vi) Debt in an aggregate amount not to exceed $600,000
consisting of obligations to Xxxxx Xxxxxxx under the Restrictive
Covenant Agreement referred to in the Xxxx Purchase Agreement; and".
2.5. FINANCIAL COVENANTS (SCHEDULES). (a) The Purchasers hereby waive
compliance by the Company with Sections 7(A)(i), 7(A)(ii), 7(A)(iii) and
7(A)(iv) of the Securities Purchase Agreement for each of the periods through
and including December 31, 1995.
(b) Each of Schedules 7A(i), 7A(ii), 7a(iii) and 7A(iv) to the
Securities Purchase Agreement is hereby amended for, all periods after
December 31, 1995 to read as set forth on Schedules 7A(i), 7A(ii), 7a(iii)
and 7A(iv), respectively, to this Amendment.
2.6. INTEREST RATE PROTECTION; COMMODITY PRICE PROTECTION. Section 7G
of the Securities Purchase Agreement is hereby amended by renumbering the
existing clause "(ii)" as clause "(iii)", by deleting the word "and" at the
end of clause (i), and by adding the following new clause (ii) thereto:
" (ii) the Company may invest in Interest Rate Protection Agreements
(as such term is defined in the Credit Agreement) and Commodity Price
Protection Agreements (as such term is defined in the Credit Agreement) as
required by the terms of the Credit Agreement; and".
2.7. WAIVER OF AMENDMENT TO CHARTER. The Purchasers hereby waive
compliance by the Company with Section 7K of the Securities Purchase
Agreement to the extent required to consummate the transactions contemplated
by the Nassau Purchase Agreement.
2.8. ADVISORY FEE. Section 15 of the Securities Purchase Agreement is
hereby amended in its entirety to read as follows:
"For so long as the Purchasers hold any Note, any Warrant
exchangeable into at least 2% of the issued and outstanding Common
Stock on a Fully Diluted basis, or at least 2% of the issued and
outstanding Common Stock on a Fully Diluted basis, the Company will
pay to
-4-
Electra in cash an annual fee (the "Advisory Fee") in the amount of
$100,000, payable in advance in equal quarterly installments on the
first Business Day of each January, April, July and October;
provided, that if the Purchasers no longer hold any Note and an
Initial Public Offering has occurred no Advisory Fee will be
payable. In addition, on the date of Amendment No. 1 hereto, the
Company will pay to Electra a pro rated amount of the quarterly
installment for the period commencing January 1, 1996."
2.9. WAIVER OF ANTI-DILUTION ADJUSTMENTS. The Purchasers hereby waive
all anti-dilution adjustments contained in the Securities Purchase Agreement
and each of the Warrants which would otherwise result from the initial
issuance of securities pursuant to the Nassau Purchase Agreement.
2.10. PUT. Section 16C of the Securities Purchase Agreement is hereby
amended in its entirety to read as follows:
" 16C. PUT. (a)(i) If no Triggering Event shall have
occurred by December 31, 2000, then the Purchasers or other holder
of the Warrants may, at any time thereafter, by giving written
notice to the Company (the "Put Notice"), require the Company to
repurchase (the "Put") all or any portion of the Warrants held by
the Purchasers or other holder of the Warrants for an amount equal
to the Put Amount and corresponding to that number of shares of
Common Stock then issuable upon exercise of the Warrants designated
in the Put Notice. The Company shall pay to the Purchasers the Put
Amount in full in cash within 30 days of the date of the Put, or if
sooner, at the same time payment is required by the terms of the
Nassau Warrants, the ING Warrant or the Provident Warrant.
(ii) Immediately upon receipt of (i) a Put Notice or (ii)
notice, whether prior to or after December 31, 2000, from the
holders of any of the Nassau Warrants, the ING Warrant, the
Provident Warrant or the Banc One Warrant (such holders being
referred to herein collectively as the "Put Holders") that the
Purchasers or such Put Holders intend to exercise put rights in
connection with the repurchase of any of their warrants by the
Company, the Company shall, before repurchasing any such warrants,
give written notice thereof to the Purchasers and/or all other Put
Holders, as the case may be. For a period of twenty (20) days
following receipt of such notice, the Purchasers and each Put
Holder shall be entitled, by written notice to the Company, the
Purchasers and/or each Put Holder, as the case may be, to elect to
require the Company to repurchase for cash its pro rata share (on
the basis of the number of shares of Common Stock then issuable upon
-5-
exercise of all of the warrants held by the Purchasers and each
such Put Holder) of the warrants held by the Purchasers and each
such Put Holder. If, at the expiration of such twenty-day period
the Purchasers or any Put Holders have not elected to have the
Company repurchase their warrants, the Company shall repurchase
only those warrants for which notice has been received and shall
pay the Put Amount in full in cash within ten (10) days of the
above-described twenty-day period.
(iii) If the Company shall not have funds legally available
in the amount necessary to repurchase all warrants of the
Purchasers and Put Holders with respect to which notice has been
received, then such warrants shall be repurchased by the Company in
the following order of priority: (A) first, on a pro rata basis in
accordance with the number of shares of Common Stock then issuable
upon exercise of all of the warrants held by the Purchasers, ING
and Provident, and (B) second, to the extent funds are legally
available therefor and subject to the prior payment in full of the
Electra, ING and Provident warrants, on a pro rata basis in
accordance with the number of shares of Common Stock then issuable
upon exercise of all of the warrants held by each other Put Holder.
(b) If, prior to December 31, 2000, any Put Holder notifies
the Company that such Put Holder intends to exercise put rights in
connection with the repurchase of any of its warrants by the
Company, the Company shall, before repurchasing any such warrants,
give written notice thereof to the Purchasers and all other Put
Holders. For a period of twenty (20) days following receipt of
such notice, the Purchasers shall be entitled, by written notice to
the Company and each Put Holder, to elect to require the Company to
repurchase the Warrants for cash at a price equal to the Put Amount
(c) Any Put not satisfied in full in cash shall remain an
obligation of the Company and shall bear interest, which interest
shall be paid together with any payment of the Put Amount, at a
rate of 14% per annum."
2.11. PREPAYMENT FEES. The Securities Purchase Agreement is hereby
amended by adding the following new Section 5F:
" 5F. PREPAYMENT FEES. The Company hereby agrees to pay the
following prepayment fees:
(a) A prepayment fee of $140,000 shall be due and payable by
the Company to Electra upon
-6-
repayment of all of the principal and interest on the Notes
(whether pursuant to paragraph 5A or paragraph 5B hereof or
otherwise) if the same shall occur on or prior to February 15, 1997.
(b) A prepayment fee of $70,000 shall be due and payable by
the Company to Electra upon repayment of all of the principal and
interest on the Notes (whether pursuant to paragraph 5A or
paragraph 5B hereof or otherwise) if the same shall occur after
February 15, 1997 and on or prior to February 15, 1998.
Notwithstanding the foregoing, no such prepayment fee shall be
payable upon repayment of all principal and interest on the Notes
pursuant to paragraph 5A(ii) hereof in connection with an Initial
Public Offering."
Section 3. CONDITIONS PRECEDENT. This Amendment shall become effective
as of the date (the "EFFECTIVE DATE") that each of the conditions precedent
set forth below shall have been fulfilled to the satisfaction of each of the
Purchasers:
(a) DELIVERY OF AMENDMENT. The Purchasers shall have received a
counterpart of this Amendment duly executed by the Company and the Subsidiary
Guarantors.
(b) DELIVERY OF ADVISORY AMENDMENT. The Purchasers shall have received
a counterpart of the Amendment No. 1 to Advisory Agreement in form and
substance satisfactory to the Purchasers and duly executed by the Company.
(c) NO DEFAULT. On and as of the Effective Date, and after giving
effect to this Amendment, no Default or Event of Default under the Securities
Purchase Agreement shall have occurred and be continuing.
(d) CREDIT AGREEMENT: OTHER DOCUMENTS. The Purchasers shall have
received a true and correct copy of all amendments, waivers and consents
applicable to the Senior Debt, in form and substance satisfactory to the
Purchasers. In addition, the Purchasers shall have received a true and
correct copy of the Xxxx Purchase Agreement, the Nassau Purchase Agreement,
the Nassau Warrants and all documents and agreements related thereto, each in
form and substance satisfactory to the Purchasers.
(e) EQUITY PROCEEDS: DEAL COSTS. The Purchasers shall have received
satisfactory evidence that (a) the Company has received from Nassau cash
proceeds of at least $6,500,000 from the Nassau Equity Infusion, (b) the
aggregate amount of Nassau/Xxxxxxx Deal Costs do not and will not
substantially exceed $600,000 and (c) the proceeds of the Nassau Equity
Infusion will be sufficient to pay substantially all of the Nassau/Xxxxxxx
Deal Costs.
-7-
(f) FEES AND EXPENSES. Electra shall have received a fee in the amount
of $25,000. In addition, the Company shall have paid or reimbursed Electra
for its out-of-pocket costs and expenses, and for the fees and expenses of
Xxxxxxx Xxxx & Xxxxxxxxx, counsel to the Purchasers and Electra, in
connection with this Amendment and any other documents prepared in connection
herewith and the transactions contemplated hereby.
Section 4. REPRESENTATION AND WARRANTY. To induce the Purchasers to
enter into this Amendment, the Company hereby represents and warrants to the
Purchasers that the representations and warranties made by the Company in the
Securities Purchase Agreement are true and correct in all material respects
on and as of the Effective Date after giving effect to the effectiveness of
this Amendment, as if made on and as of the Effective Date, unless expressly
stated to relate to an earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such
earlier date. References in such representations and warranties to the
Securities Purchase Agreement shall be deemed to be references to the
Securities Purchase Agreement as amended by this Amendment.
Section 5. MISCELLANEOUS. (a) The Company hereby confirms that,
except as expressly provided in this Amendment, all of the representations,
warranties, terms, covenants and conditions of the Securities Purchase
Agreement and the Warrants shall remain unwaived and shall continue to be in
full force and effect in accordance with their respective terms. The
amendments, waivers and consents provided herein shall be limited precisely
as provided herein and shall not be deemed to be an amendment to, waiver of
or consent to any other provision of the Securities Purchase Agreement or the
Warrants, or of any transaction or further or future action on the part of
the Company or any other Person which would require the consent of the
Purchasers under the Securities Purchase Agreement or the Warrants or any
other instrument.
(b) This Amendment may be executed in any number of counterparts by the
parties hereto and all of said counterparts when taken together shall be
deemed to constitute one and the same instrument.
-8-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as
of the date first above written.
XxXXXXX AIRCRAFT HOLDINGS, INC.
By: /s/ Xxxxxx Rank
-------------------------------------
Name:
Title:
ELECTRA INVESTMENT TRUST P.L.C.
By:
-------------------------------------
Name:
Title:
ELECTRA ASSOCIATES, INC.
By:
-------------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as
of the date first above written.
XxXXXXX AIRCRAFT HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
ELECTRA INVESTMENT TRUST P.L.C.
By: /s/ [ILLEGIBLE]
-------------------------------------
Name:
Title:
ELECTRA ASSOCIATES, INC.
By: /s/ [ILLEGIBLE] /s/ XX Xxxxx
-------------------------------------
Name:
Title:
SUBSIDIARY GUARANTORS:
XXXX COMPONENTS, INC.
By: /s/ Xxxxxx Rank
-------------------------------
Name:
Title:
XXXX HOLDINGS, INC.
By: /s/ Xxxxxx Rank
-------------------------------
Name:
Title:
TRI-STAR TECHNOLOGIES
By: Tri-Star Technologies, Inc.,
its General Partner
By: /s/ Xxxxxx Rank
-------------------------------
Name:
Title:
TRI-STAR TECHNOLOGIES, INC.
By: /s/ Xxxxxx Rank
-------------------------------
Name:
Title:
TRI-STAR ELECTRONICS INTERNATIONAL, INC.
By: /s/ Xxxxxx Rank
-------------------------------
Name:
Title:
TRI-STAR HOLDINGS, INC.
By: /s/ Xxxxxx Rank
-------------------------------
Name:
Title:
UNIDEC S.A.
By:
-------------------------------
Name:
Title.
SUBSIDIARY GUARANTORS:
XXXX COMPONENTS, INC.
By:
-------------------------------
Name:
Title:
XXXX HOLDINGS, INC.
By:
-------------------------------
Name:
Title:
TRI-STAR TECHNOLOGIES
By: Tri-Star Technologies, Inc.,
its General Partner
By:
-------------------------------
Name:
Title:
TRI-STAR TECHNOLOGIES, INC.
By:
-------------------------------
Name:
Title:
TRI-STAR ELECTRONICS INTERNATIONAL, INC.
By:
-------------------------------
Name:
Title:
TRI-STAR HOLDINGS, INC.
By:
-------------------------------
Name:
Title:
UNIDEC S.A.
By: /s/ [ILLEGIBLE]
-------------------------------
Name:
Title:
XXXXXXXXXXX INTERNATIONAL LIMITED
By: /s/ Xxxxxx Rank
-------------------------------
Name:
Title:
XXXXXXXXXXX INTERNATIONAL, INC.
By: /s/ Xxxxxx Rank
-------------------------------
Name:
Title:
Schedule 7A(i)
Leverage Ratio
The Company and the Subsidiary Guarantors will not permit the Leverage
Ratio to exceed the following respective ratios at any time during the
following respective periods.
PERIOD RATIO
------ -----
From January 1, 1996
through March 30, 1996 12.10 to 1
From March 31, 1996 through
June 29, 1996 3.98 to 1
From June 30, 1996 through
September 29, 1996 3.82 to 1
From September 30, 1996
through December 30, 1996 3.38 to 1
From December 31, 1996
through March 30, 1996 2.84 to 1
From March 31, 1997
through June 30, 1997 4.29 to 1
From July 1, 1997 through
December 31, 1997 3.30 to 1
From January 1, 1998
through June 30, 1998 3.03 to 1
From July 1, 1998 through
December 31, 1998 2.48 to 1
From January 1, 1999 and
at all times thereafter 2.20 to 1
Schedule 7A(ii)
EBITDA Ratio
The Company and the Subsidiary Guarantors will not permit the EBITDA
Ratio to exceed the following respective ratios at any time during the
following respective periods:
PERIOD RATIO
------ -----
From March 31, 1996 through
June 29, 1996 7.86 to 1
From June 30, 1996 through
September 29, 1996 5.38 to 1
From September 30, 1996
through December 30, 1996 4.05 to 1
From December 31, 1996
through March 30, 1997 3.27 to 1
From March 31, 1997
through June 30, 1997 2.53 to 1
From July 1, 1997 through
December 31, 1997 2.20 to 1
From January 1, 1998
through December 31, 1998 1.93 to 1
From January 1, 1999 and
at all times thereafter 1.65 to 1
Schedule 7A(iii)
Net Worth
The Company will not permit its Net worth to be less than the following
respective amounts at any time during the following respective periods:
PERIOD AMOUNT
------ ------
From January 1, 1996
through March 30, 1996 $ 2,700,000
From March 31, 1996 through
June 29, 1996 $ 8,929,800
From June 30, 1996 through
September 29, 1996 $ 9,255,600
From September 30, 1996
through December 30, 1996 $10,102,500
From December 31, 1996
through March 30, 1997 $11,169,000
From March 31, 1997
through June 30, 1997 $ 8,100,000
From July 1, 1997 through
December 31, 1997 $ 9,450,000
From January 1, 1998
through June 30, 1998 $11,700,000
From July 1, 1998 through
December 31, 1998 $13,725,000
From January 1, 1999 and
at all times thereafter $15,750,000
Schedule 7A(iv)
Fixed Charges Ratio
The Company and the Subsidiary Guarantors will not permit the Fixed
Charges Ratio to be less than the following respective ratios at any time
during the following respective periods:
PERIOD RATIO
------ -----
From March 31, 1996 through
June 29, 1996 0.234 to 1
From June 30, 1996 through
September 29, 1996 0.666 to 1
From September 30, 1996
through December 30, 1996 0.891 to 1
From December 31, 1996
through March 30, 1997 1.089 to 1
From March 31, 1997
through June 30, 1997 1.035 to 1
From July 1, 1997 through
December 31, 1997 1.215 to 1
From January 1, 1998 and
at all times thereafter 1.350 to 1
