EXHIBIT 4.2
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TRIDEX CORPORATION
TRIDEX NC, INC.
ULTIMATE TECHNOLOGY CORPORATION
$11,000,000 19% Senior Subordinated Notes due April 17, 2005
of Tridex Corporation, Tridex NC, Inc. and Ultimate Technology Corporation
285,714 Shares of Common Stock, no par value, of Tridex Corporation
Warrants for 350,931 Shares of Common Stock, no par value
(subject to adjustment), of Tridex Corporation
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SECURITIES PURCHASE AGREEMENT
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April 17, 1998
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TABLE OF CONTENTS
Page
1. Authorization of Securities; Other Purchasers; etc...................1
2. Sale and Purchase of Securities......................................3
3. Closing..............................................................3
4. Conditions to Closing................................................3
4.1. Representations and Warranties Correct........................3
4.2. Performance; No Default.......................................3
4.3. Related Transactions..........................................4
4.4. Compliance Certificate........................................5
4.5. Opinion of Counsel for the Issuers............................5
4.6. Opinion of Your Special Counsel...............................5
4.7. Certain Additional Documents to be Delivered at or
Prior to the Closing..........................................5
4.8. Sale of Securities to Other Purchasers........................5
4.9. Legal Investment; Certificate.................................5
4.10. Sale and Purchase Not Forbidden by Law........................5
4.11. Payment of Transaction Costs..................................6
4.12. Proceedings and Documents.....................................6
4.13. The Term "Obligor"............................................6
5. Representations and Warranties.......................................6
5.1. Organization, Standing, etc...................................6
5.2. Names; Jurisdictions of Incorporation; Subsidiaries...........7
5.3. Qualification.................................................7
5.4. Business, etc.................................................7
5.5. Shares; Voting Provisions; Options; Warrant Shares, etc.......7
5.6. Financial Statements..........................................8
5.7. Changes; Solvency, etc........................................9
5.8. Tax Returns and Payments......................................9
5.9. Funded Debt, Current Debt, Liens, Investments, Transactions
with Affiliates, Leases......................................10
5.10. Title to Properties; Liens; Leases; Real Property............10
5.11. Litigation, etc..............................................11
5.12. Valid and Binding Obligations; Compliance with Other
Instruments; Absence of Restrictions, etc....................11
5.13. ERISA........................................................13
5.14. Consents, etc................................................14
5.15. Proprietary Rights; Licenses.................................14
5.16. Offer of Securities; Investment Bankers......................14
5.17. Government Regulation........................................15
5.18. Disclosure...................................................15
5.19. Labor Relations; Suppliers, Distributors and Customers.......15
6. Use of Proceeds; Regulation U, etc..................................15
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7. Financial Statements and Information................................16
8. Inspection; Board Visitation Rights; Confidentiality................21
9. Prepayment of Notes.................................................22
9.1. Required Prepayment Without Premium of Notes.................22
9.2. Optional Prepayment With Premium of Notes....................23
9.3. Prepayment Without Premium of the Notes at the Option of
Holders of Notes upon a Change of Control....................23
9.4. Allocation of Partial Prepayments of Notes...................24
9.5. Notice of Optional Prepayments of Notes......................24
9.6. Maturity; Accrued Interest; Surrender, etc. of Notes.........24
9.7. Purchase of Notes............................................24
9.8. Payment on Non-Business Days.................................24
9.9. Application of Notes in Satisfaction of Exercise Price
of Warrants..................................................24
10. Subordination of Notes and Note Guarantees..........................25
11. Securities Act Matters; Option Plans................................25
12. Registration Rights.................................................25
12.1. Registration on Request......................................25
12.2. Incidental Registration......................................27
12.3. Permitted Registration.......................................28
12.4. Registration Procedures......................................29
12.5. Indemnification..............................................30
12.6. Restrictions on Other Agreements.............................32
13. Covenants of the Holding Company....................................32
13.1. Books of Record and Account; Reserves........................32
13.2. Payment of Taxes; Corporate Existence; Maintenance of
Properties; Compliance with Laws; Lines of Business;
Proprietary Rights and Licenses..............................32
13.3. Insurance....................................................33
13.4. Limitation on Discount or Sale of Receivables................33
13.5. Limitation on Funded Debt and Current Debt...................33
13.6. Certain Financial Covenants..................................35
13.7. Limitation on Tax Consolidation..............................37
13.8. Limitation on Liens..........................................37
13.9. Limitation on Transactions with Affiliates...................38
13.10. Limitation on Investments....................................38
13.11. Limitation on Issuance of Shares of Subsidiaries.............38
13.12. Limitation on Subsidiary's Consolidation or Merger...........38
13.13. Limitation on the Holding Company's Consolidation or Merger..39
13.14. Limitation on Disposition of Property........................40
13.15. Limitation on Leasebacks.....................................41
13.16. Modification of Certain Documents, Agreements and
Instruments; Fiscal Year.....................................41
13.17. Further Assurances...........................................42
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13.18. Additional Subsidiaries......................................42
13.19. Listing Status...............................................42
14. Definitions.........................................................42
14.1. Definitions of Capitalized Terms.............................42
14.2. Other Definitions............................................57
14.3. Accounting Terms and Principles; Laws........................58
15. Remedies............................................................58
15.1. Events of Default Defined; Acceleration of Maturity..........58
15.2. Suits for Enforcement, etc...................................63
15.3. No Election of Remedies......................................63
15.4. Remedies Not Waived..........................................63
15.5. Application of Payments......................................63
16. Registration, Transfer and Exchange of Securities; Limitations on
Transfers...........................................................64
17. Replacement of Securities...........................................65
18. Amendment and Waiver................................................65
19. Method of Payment of Securities.....................................66
20. Expenses; Indemnity.................................................67
21. Taxes...............................................................67
22. Communications......................................................67
23. Survival of Agreements, Representations and Warranties, etc.........68
24. Successors and Assigns; Rights of Other Holders.....................69
25. Purchase for Investment; ERISA......................................69
26. Governing Law; Jurisdiction; Waiver of Jury Trial...................71
27. Miscellaneous.......................................................71
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Schedule I Schedule of Purchasers
Exhibit 1(a) Form of Note
Exhibit 1(b) Form of Certificate for Common Stock
Exhibit 1(c) Form of Warrant
Exhibit 1(g) Form of Note Guarantee
Exhibit 3 Wire Instructions
Exhibit 4.3(b) Indebtedness to be Repaid at Closing
Exhibit 4.5 Opinion of Xxxxxxxx, Xxxxx & Xxxxxx
Exhibit 4.6 Opinion of Xxxxxx, Hall & Xxxxxxx
Exhibit 4.7 Additional Documents to be Delivered at or Prior to the
Closing
Exhibit 5.2 Names; Jurisdictions of Incorporation; Subsidiaries
Exhibit 5.4 Disclosure Documents
Exhibit 5.5(a) Shares; Voting Provisions
Exhibit 5.5(b) Rights, Options, Warrants, etc.
Exhibit 5.6(a) Financial Statements
Exhibit 5.6(b) Projections and Pro Forma Unaudited Consolidated Balance
Sheet
Exhibit 5.8 Tax Returns and Payments
Exhibit 5.9 Funded Debt, Current Debt, Liens, Investments,
Transactions with Affiliates and Leases
Exhibit 5.10 Real Property
Exhibit 5.11 Litigation, etc.
Exhibit 5.13 ERISA
Exhibit 5.14 Consents
Exhibit 6 Use of Proceeds
Exhibit 7(c)(iv) Information as to New Subsidiaries
Exhibit 12.6 Restrictions on Other Agreements
Exhibit 16(b)(iv) Acknowledgment (re: subordination)
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TRIDEX CORPORATION
TRIDEX NC, INC.
ULTIMATE TECHNOLOGY CORPORATION
00 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
April 17, 1998
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
TRIDEX CORPORATION, a Connecticut corporation (the "Holding Company"),
TRIDEX NC, INC., a North Carolina corporation ("TNC"), and ULTIMATE TECHNOLOGY
CORPORATION, a New York corporation ("UTC" and, together with the Holding
Company and TNC, acting as joint and several obligors, the "Obligor") (sometimes
collectively referred to herein as the "Issuers" and each, individually, as an
"Issuer"), agree with you as follows. Certain capitalized terms used herein are
defined in section 15.
1. Authorization of Securities; Other Purchasers; etc.
(a) The Obligor has authorized the issue and sale of its 19% Senior
Subordinated Notes due April 17, 2005 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes") in
the aggregate principal amount of $11,000,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto.
(b) The Holding Company has authorized the issue and sale of 285,714
shares of its Common Stock (herein, such 285,714 shares, together with any
Shares issued in exchange therefor or replacement thereof, called the
"Purchased Common Shares"). The certificates for the Common Stock are to
be substantially in the form of Exhibit 1(b) attached hereto.
(c) The Holding Company has authorized the issue and sale of its
warrants (herein, together with any warrants issued in exchange therefor
or replacement thereof, called the "Warrants") evidencing rights to
purchase in the aggregate 350,931 shares of its Common Stock, subject only
to the approval thereof by the stockholders of the Holding Company. The
Warrants shall be exercisable for $7.00 per share, shall expire on April
17, 2008 and shall be substantially in the form of Exhibit 1(c) attached
hereto.
(d) The Notes, the Purchased Common Shares, the Warrants and, unless
the context clearly requires otherwise, the Warrant Shares (as defined in
the Warrants), are collectively referred to as the "Securities" and each
as a "Security".
(e) As further provided in each of the Notes, prior to the Warrant
Exchange, the Notes shall bear interest at 19% per annum and, at the
option of the Obligor, 12/19th
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of the amount of interest which is due and payable on the Notes on any
regularly scheduled interest payment date shall be paid in cash and 7/19th
of the amount of interest which is due and payable on the Notes on any
regularly scheduled interest payment date shall be paid in kind by adding
to the principal amount of each such Note an amount equal to the interest
not then paid in cash. Commencing immediately after the Warrant Exchange,
the Notes shall bear interest at 12% per annum, payable entirely in cash.
Interest on the Notes is payable quarterly on each January 17, April 17,
July 17 and October 17, commencing July 17, 1998. In no event shall the
amount paid or agreed to be paid by the Obligor as interest and premium on
any Note exceed the highest lawful rate permissible under any law
applicable thereto.
(f) The Holding Company shall use its best efforts to cause its
stockholders to approve the issue and sale of the Warrants at the May,
1998 annual meeting of the stockholders of the Holding Company. In the
event that the stockholders of the Holding Company shall approve the issue
and sale of the Warrants, the Holding Company shall promptly thereafter
cause the Warrants to be issued and sold to you and the Other Purchasers
in consideration of the reduction of the interest rate required to be paid
in respect of the Notes to 12% per annum (the "Warrant Exchange").
(g) The Notes shall be secured by and entitled to the benefits of
unconditional guarantees from each of the Subsidiaries of the Holding
Company hereafter organized or acquired, pursuant to one or more note
guarantees substantially in the form of Exhibit 1(g) attached hereto (each
a "Note Guarantee" and collectively the "Note Guarantees").
The Securities are to be issued under this Agreement and separate Securities
Purchase Agreements (the "Other Securities Purchase Agreements") identical
herewith (except as to the name and address of each of the other purchasers)
being entered into concurrently by the Company with each of the other purchasers
(the "Other Purchasers") named in Schedule I attached hereto. The issue of
Securities to you and the issues of Securities to each of the Other Purchasers
are separate transactions and you shall not be liable or responsible for the
acts or defaults of the Other Purchasers.
2. Sale and Purchase of Securities. The Issuers will issue and sell to you and,
subject to the terms and conditions hereof and in reliance upon the
representations and warranties of the Issuers contained herein and in the other
Operative Documents, you will purchase from the Issuers, at the Closing, as
specified in section 3, such Securities (other than the Warrants) as are
specified on that portion of Schedule I attached hereto as is applicable to you.
The aggregate purchase price of the Notes and the Purchased Common Shares shall
be $13,000,000 which shall be allocated (a) $11,000,000 to the Notes and (b)
$2,000,000 to the Purchased Common Shares. The Issuers, you and each of the
Other Purchasers agree that the values ascribed to the Securities (which values
shall be used by the Issuers, you and the Other Purchasers, as well as any
subsequent holder of any of the Securities, for all purposes, including the
preparation of tax returns) shall be determined in accordance with the
foregoing.
3. Closing. The closing of the sale and purchase of the Securities hereunder
(the "Closing") shall take place at the office of Messrs. Xxxxxx, Hall &
Xxxxxxx, Exchange Place, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, on April
17, 1998 (or on such other date (not later than April 17, 1998) as may be agreed
to in writing by the Issuers, you and each of the Other Purchasers) (the
"Closing Date"). The Closing shall occur not later than 11:00 A.M. Boston time
(your reinvestment deadline) on the Closing Date. At the Closing, the Issuers
will deliver to you the
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Securities to be purchased by you at the Closing against payment of the purchase
price thereof to (or for the benefit of) the Issuers in immediately available
funds in accordance with the wire instructions set forth on Exhibit 3 attached
hereto. Delivery of the Securities to be purchased by you at the Closing shall
be made in the form of one or more Notes and Purchased Common Shares, in such
denominations and registered in such names as are specified on Schedule I
attached hereto and in each case dated, and in the case of the Notes, bearing
interest from the Closing Date. If at the Closing the Issuers shall fail to
tender the Securities to be delivered to you thereat as provided herein, or if
at the Closing any of the conditions specified in section 4 shall not have been
fulfilled to your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement, without thereby waiving any other
rights you may have by reason of such failure or such non-fulfillment.
4. Conditions to Closing. Your obligation to purchase and pay for the Securities
to be purchased by you hereunder at the Closing is subject to the fulfillment to
your reasonable satisfaction, prior to or at the Closing, of the following
conditions:
4.1. Representations and Warranties Correct. The representations and
warranties made by the Issuers herein and in the other Operative Documents shall
have been correct when made and shall be correct in all material respects at and
as of the time of the Closing (after giving effect to the transactions
consummated at the Closing).
4.2. Performance; No Default. Each of the Issuers shall have performed all
agreements and complied with all conditions contained herein and in the other
Operative Documents required to be performed or complied with by it prior to or
at the Closing. At the time of the Closing, no Default or Event of Default shall
exist. Since December 31, 1997, no event shall have occurred which could
reasonably be expected to result in a Material Adverse Change.
4.3. Related Transactions.
(a) Pursuant to and in accordance with the terms of the Stock
Purchase Agreement dated as of February 24, 1998 (the "Acquisition
Agreement") by and among Xxxx X. Xxxxx (the "Seller"), Progressive
Software, Inc., a North Carolina corporation ("Progressive"), the Holding
Company and TNC (the Acquisition Agreement and the other agreements,
documents and instruments executed or to be executed in connection
therewith are sometimes collectively referred to as the "Acquisition
Documents"), TNC shall have purchased from the Seller all of the issued
and outstanding shares of capital stock of Progressive and immediately
thereafter merged with and into Progressive (such purchase and merger and
the other transactions contemplated by the Acquisition Documents are
hereinafter referred to as the "Acquisition"). All provisions of relevant
law with respect to the Acquisition shall have been complied with. All
filings necessary to effectuate the Acquisition, including, without
limitation, the filing of a Certificate of Merger with the Secretary of
State of North Carolina, shall have been made. The aggregate consideration
to be paid to or for the account of the Seller in consideration for the
transfer of the capital stock of Progressive, excluding all transaction
fees and expenses (which shall not exceed $2,000,000), shall not exceed
the amount specified in the Acquisition Agreement. The terms of the
Acquisition Documents shall be satisfactory to you in all material
respects.
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(b) The debt and equity capitalization of the Holding Company and
its Subsidiaries shall be in all respects satisfactory to you. Without
limiting the generality of the foregoing, the Persons indicated on Exhibit
5.5(a) attached hereto shall have acquired from the Holding Company the
Shares of the Company specified on such exhibit in connection with the
Acquisition and shall have paid the consideration specified for such
Shares on such exhibit, in each case upon terms satisfactory to you in all
material respects. After giving effect to the Closing, neither the Holding
Company nor any of its Subsidiaries shall have any Funded Debt or Current
Debt other than that evidenced by the Notes and that which is specified on
Exhibit 5.9 attached hereto. The Obligor shall have repaid in full all of
the Indebtedness specified on Exhibit 4.3(b) attached hereto and all
related Liens shall have been terminated or adequate provision shall have
been made therefor and you or your special counsel shall have received
evidence of the same.
(c) The Organizational Documents of the Holding Company and each of
its Subsidiaries shall be in form and substance satisfactory to you in all
material respects.
(d) The Fleet Bank Documents shall have been executed and delivered
and shall be in full force and effect. The Holding Company, TNC and UTC
shall have established pursuant thereto (i) an $8,000,000 one-year senior
secured revolving credit facility and (ii) a $12,000,000 five-year senior
secured term loan facility. The aggregate amount of the unused borrowing
availability immediately following the Closing under such revolving credit
facility shall be at least $4,500,000 and you shall have been furnished
with a borrowing base certificate satisfactory in form and substance to
you evidencing the same. The terms of the Fleet Bank Documents shall be
satisfactory to you in all material respects.
4.4. Compliance Certificate. You shall have received an Officer's
Certificate, dated the Closing Date, certifying that the conditions specified in
sections 4.1 and 4.2 have been fulfilled.
4.5. Opinion of Counsel for the Issuers. At the Closing, you shall have
received an opinion, dated the Closing Date, from Messrs. Xxxxxxxx, Xxxxx &
Xxxxxx, counsel for the Issuers, substantially in the form of Exhibit 4.5
attached hereto.
4.6. Opinion of Your Special Counsel. At the Closing, you shall have
received an opinion dated the Closing Date, from your special counsel, Messrs.
Xxxxxx, Hall & Xxxxxxx, substantially in the form of Exhibit 4.6 attached
hereto.
4.7. Certain Additional Documents to be Delivered at or Prior to the
Closing. You shall have received the items specified on Exhibit 4.7 attached
hereto, each of which shall be in form and substance satisfactory to you in all
material respects.
4.8. Sale of Securities to Other Purchasers. At the Closing, the Issuers
shall sell to the Other Purchasers the Securities to be purchased at the Closing
by the Other Purchasers pursuant to the Other Securities Purchase Agreements and
shall receive payment in full of the purchase price thereof.
4.9. Legal Investment; Certificate. At the time of the Closing, your
purchase of the Securities to be issued pursuant hereto shall be permitted under
the laws and regulations of any jurisdiction to which you are subject (without
resort to any provision of any such law permitting
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limited investments by you without restriction as to the character of the
particular investment), and you shall, if requested by you, have received an
Officer's Certificate, dated the Closing Date, certifying as to such matters as
you may reasonably request to enable you to determine whether your purchase is
so permitted.
4.10. Sale and Purchase Not Forbidden by Law. The offer, issue, sale and
delivery by the Issuers of the Securities to be issued pursuant hereto and your
purchase of such Securities at the Closing shall not be prohibited by and shall
not subject you to any tax, penalty, liability or other onerous condition under
or pursuant to any law, statute, rule or regulation then in effect.
4.11. Payment of Transaction Costs. The Issuers shall have paid, in
immediately available funds, all reasonable fees, expenses and disbursements
incurred by you and the Other Purchasers at or prior to the time of the Closing
in connection with the transactions contemplated by the Operative Documents,
including, without limitation, the reasonable fees, expenses and disbursements
of Xxxxxx, Hall & Xxxxxxx.
4.12. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by the Operative Documents and all agreements,
documents and instruments incident to such transactions shall be satisfactory in
substance and form to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or copies thereof as
you or they may reasonably request.
4.13. The Term "Obligor". All references to the "Obligor" herein shall
refer to and include each of the Holding Company, TNC and UTC separately and all
representations contained herein shall be deemed to be separately made by each
of them, and each of the covenants, agreements and obligations set forth herein
shall be deemed to be the joint and several covenants, agreements and
obligations of each of them. Any notice, request, consent, report or other
information or agreement delivered by any of the Holding Company, TNC or UTC
shall be deemed to be ratified by, consented to and also delivered by each of
the others. Each of the Holding Company, TNC and UTC recognizes and agrees that
each covenant and agreement of the "Obligor" under this Agreement and the other
Operative Documents shall create a joint and several obligation of the Holding
Company, TNC and UTC, which may be enforced against all of them, jointly, or
against each of them separately, provided, however, that the principal, premium,
if any, interest and other amounts due and payable under or in respect of the
Notes shall be payable first from TNC and the liability of the Holding Company
and UTC with respect to the Notes shall be enforced by you and the Other
Purchasers only at such time as a demand by you or the Other Purchasers for
payment of such amounts has first been made to TNC pursuant to this Agreement
and the Other Securities Purchase Agreements and TNC shall have failed to make
such payment within two (2) days after the date such demand is made.
5. Representations and Warranties. Each of the Issuers hereby represents and
warrants that (after giving effect to the transactions consummated at the
Closing):
5.1. Organization, Standing, etc. The Holding Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its
properties, to carry on its business as now conducted, and now proposed to be
conducted as described in the Disclosure Documents referred to in section 5.4,
and to execute, deliver and perform each of the Operative Documents to which it
is (or is to be) a party and to consummate the transactions contemplated by the
Operative Documents.
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5.2. Names; Jurisdictions of Incorporation; Subsidiaries. Exhibit 5.2
attached hereto correctly specifies as to the Holding Company and each of its
Subsidiaries (a) its legal name, (b) the jurisdiction of its incorporation, (c)
each jurisdiction (other than its jurisdiction of incorporation) in which it is
qualified to do business (or in which it has submitted an application for such
qualification), and (d) each jurisdiction in which any of its material
properties are (or are to be) located. The Holding Company does not have any
Subsidiary that is not named on Exhibit 5.2 attached hereto.
5.3. Qualification. The Holding Company and each of its Subsidiaries is
duly qualified or licensed (or has applied to become qualified or licensed) to
do business and is in good standing in each jurisdiction in which the character
of the properties owned or leased or the nature of the activities conducted
makes such qualification or licensing necessary, except for those jurisdictions
in which the failure to be so qualified or licensed or to be in good standing
has not resulted in, and could not reasonably be expected to result in, a
Material Adverse Change.
5.4. Business, etc. The Holding Company and its Subsidiaries are engaged
in the business of (i) designing and manufacturing point-of-sale (POS)
electronic display monitors, keyboards and other peripheral equipment and, upon
completing the Acquisition in designing and developing computer software, which
hardware and software products are used by retailers and restaurants and in
other transaction-based applications, and (ii) assembling and integrating
customized POS systems consisting of terminals, monitors, keyboards, scanners,
touch-screens, microprocessors, printers and cash drawers used by retailers and
restaurants and in other transaction-based applications (the "Business"). The
Issuers have furnished to you a true, correct and complete copy of the documents
listed on Exhibit 5.4 attached hereto (the "Disclosure Documents").
5.5. Shares; Voting Provisions; Options; Warrant Shares, etc.
(a) Exhibit 5.5(a) attached hereto correctly and fully specifies as
to the Holding Company and each of its Subsidiaries (after giving effect
to the transactions consummated at the Closing) (i) its authorized and
outstanding Shares and (ii) the name of each record and beneficial owner
of such Shares who has acquired such Shares in connection with the
Acquisition, together with the number (and class, if any) of such Shares
held by each such Person and the aggregate consideration paid by such
Person for such Shares (which consideration, unless otherwise noted on
such exhibit, was paid in cash in full on or prior to the Closing Date).
All of the outstanding Shares of the Holding Company and each of its
Subsidiaries are, and all Warrant Shares issued upon exercise of the
Warrants in accordance with the terms thereof will be, duly authorized,
validly issued, fully paid and non-assessable and not subject to any
preemptive right, right of first refusal or similar right on the part of
the Holding Company or any other Person (except as provided in section 16)
and all of such Shares have been (or will have been) offered, issued and
sold in all material respects in accordance with all applicable laws. To
the knowledge of the Issuers, except as set forth on Exhibit 5.5(a)
attached hereto, each of the owners of the Shares indicated on Exhibit
5.5(a) attached hereto own the Shares indicated on such exhibit free of
any Lien, proxy, voting agreement, voting trust, stockholders agreement or
similar agreement or restriction. Except as set forth on Exhibit 5.5(a)
attached hereto, neither the Organizational Documents nor any other
agreement, document or instrument binding on or applicable to the Holding
Company or any of its Subsidiaries or any of its stockholders contains any
provision requiring a higher voting
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requirement with respect to action taken (and/or to be taken) by its board
of directors or stockholders than that which would apply in the absence of
such provision.
(b) Except as provided in section 12, except for the Warrants and
except as set forth on Exhibit 5.5(b) attached hereto, (i) there are no
outstanding rights, options, warrants or agreements for the purchase from,
or sale or issuance by, the Holding Company or any of its Subsidiaries of
any of its Shares or any securities convertible into or exercisable or
exchangeable for such Shares; (ii) there are no agreements on the part of
the Holding Company or any of its Subsidiaries to issue, sell or
distribute any of its Shares, other securities or assets; (iii) neither
the Holding Company nor any of its Subsidiaries has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of
its Shares or any interest therein or to pay any dividend or make any
distribution in respect thereof; and (iv) no Person is entitled to any
rights with respect to the registration of any Shares of the Holding
Company or any of its Subsidiaries under the Securities Act (or the
securities laws of any other jurisdiction).
(c) Assuming that the Warrant Exchange were to have occurred on the
Closing Date, the aggregate number of shares of Common Stock issuable upon
exercise in full of the Warrants immediately after the Closing is 350,931,
which, if then issued, would constitute not less than 4.17% of the Common
Stock (calculated on a fully-diluted basis assuming the conversion,
exercise and exchange of all outstanding securities convertible into and
exercisable or exchangeable for Common Stock, including, without
limitation, the Warrants). The Holding Company has reserved 350,931 shares
of Common Stock solely for issuance upon exercise of the Warrants.
(d) The aggregate number of the Purchased Common Shares constitute
(i) 4.49% of the outstanding Common Stock and (ii) 3.40% of the Common
Stock, calculated on a fully-diluted basis in accordance with section
5.5(c).
5.6. Financial Statements. You have been furnished with:
(a) the financial statements referred to on Exhibit 5.6(a) attached
hereto, which financial statements (subject, in the case of any unaudited
financial statements, to normal year-end and audit adjustments and the
omission of footnote disclosure) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby
and present fairly in all material respects the financial position and the
results of operations and cash flows of the Person(s) purported to be
covered thereby as at the respective dates and for the respective periods
indicated in conformity with GAAP (subject, in the case of any unaudited
financial statements, to normal year-end and audit adjustments and the
omission of footnote disclosure);
(b) the projections referred to on Exhibit 5.6(b) attached hereto,
which projections were prepared in good faith, are based upon assumptions
that the Holding Company believes are reasonable and take into account all
material information regarding the matters set forth therein. Such
projections represent the Holding Company's current estimate of the future
financial performance of the Holding Company and its Subsidiaries. The
Holding Company does not currently anticipate any material deviation from
such projections; and
69
(c) the pro forma unaudited consolidated balance sheet referred to
on Exhibit 5.6(b) attached hereto, which balance sheet sets forth the
estimated financial position of the Holding Company and its Subsidiaries
as at the Closing Date, adjusted on a pro forma basis to give effect to
the consummation on the Closing Date of the transactions contemplated by
the Operative Documents, and reflects all known material liabilities of
the Persons purported to be covered thereby, contingent or other, as at
the Closing Date.
5.7. Changes; Solvency, etc. Since December 31, 1997: (a) there has been
no change in the assets, liabilities or financial condition of the Holding
Company and its Subsidiaries from that set forth in the balance sheet as at such
date referred to on Exhibit 5.6(a) attached hereto, other than changes in the
ordinary course of business which have not been, either in any single case or in
the aggregate, materially adverse and (b) no condition or event has occurred
which has resulted in, or could reasonably be expected to result in, a Material
Adverse Change. Each of the Holding Company and each of its Subsidiaries is
(and, after giving effect to the consummation of the transactions at Closing,
will be) Solvent.
5.8. Tax Returns and Payments. The Holding Company and, except as set
forth on Exhibit 5.8 attached hereto, each of its Subsidiaries have filed all
tax returns required by law to be filed and have paid all taxes and assessments
shown to be due and payable on such returns and all other governmental charges
levied upon any of their respective properties, assets, income, receipts,
franchises or sales other than those not yet delinquent. The income tax
liability of each of the Holding Company and each of its Subsidiaries has been
finally determined by all applicable foreign and domestic, federal, state and
local governmental authorities, including, without limitation, the Internal
Revenue Service, and satisfied, or the time for audit has expired, for all
fiscal years through the fiscal year specified as applicable for such Person on
Exhibit 5.8 attached hereto. Neither the Holding Company nor any of its
Subsidiaries has executed any waiver or waivers that would have the effect of
extending the applicable statute of limitations in respect of income tax
liabilities. The charges, accruals and reserves in the financial statements
referred to on Exhibit 5.6(a) attached hereto in respect of taxes for all fiscal
periods are adequate, and there are no known unpaid assessments for additional
taxes for any fiscal period or of any basis therefor. The Holding Company and
its Subsidiaries are indemnified under the Acquisition Agreement by the Seller
for certain liabilities in respect of taxes (and all related penalties and other
amounts) of the Seller and Progressive.
5.9. Funded Debt, Current Debt, Liens, Investments, Transactions with
Affiliates, Leases. Exhibit 5.9 attached hereto correctly describes as to the
Holding Company and each of its Subsidiaries (after giving effect to the
transactions consummated at the Closing):
(a) all of its Funded Debt and Current Debt to be outstanding
immediately following the Closing in an amount, either individually or in
the aggregate, of $100,000 or more (other than that evidenced by the
Notes);
(b) all Liens to which any of its properties and assets will be
subject immediately following the Closing (other than those of the
character described in section 13.8(b));
(c) all of its Investments having a fair market value, individually
or in the aggregate, of $100,000 or more (and all agreements and
commitments to make Investments) to be owned or held immediately following
the Closing (other than
70
Investments of the character described in clauses (b) through (g),
inclusive, of the definition of Permitted Investments);
(d) all of its Affiliates, and all agreements (including, without
limitation, all employment and management consulting agreements) with such
Affiliates and all transactions with such Affiliates which it is now
obligated or now intends to consummate at any time in the future; and
(e) each lease of real and/or personal property (other than any
lease under which the Holding Company and its Subsidiaries pay less than
$100,000 in the aggregate during any period of twelve consecutive months)
under which it is a lessee or sublessee and the name of the lessor, the
lessee or sublessee, a general description of the property leased, the
annual rents payable thereunder and the term thereof.
5.10. Title to Properties; Liens; Leases; Real Property. The Holding
Company and each of its Subsidiaries has good and valid (in the case of
personalty) and good and marketable (in the case of real property) title to all
of their respective properties and assets (including, without limitation, the
properties and assets reflected in the balance sheet dated December 31, 1997,
referred to on Exhibit 5.6(a) attached hereto), except properties and assets
disposed of since such date in the ordinary course of business, free and clear
of all Liens (other than Liens permitted under section 13.8). The Holding
Company and each of its Subsidiaries enjoys peaceful and undisturbed possession
under all leases under which it operates, and all of such leases are valid,
subsisting and in full force and effect and are on "arm's length" terms. The
only leases of real property to which the Holding Company or any of its
Subsidiaries is a party are listed on Exhibit 5.9 attached hereto. Except as set
forth on Exhibit 5.10 attached hereto, there are no subtenants or licensees of
any real property leased by the Holding Company or any of its Subsidiaries. The
only real property owned by the Holding Company or any of its Subsidiaries is
described on Exhibit 5.10 attached hereto, and there are no tenants or licensees
thereof or thereon.
5.11. Litigation, etc. Except as set forth on Exhibit 5.11 attached
hereto, there is no action, proceeding or investigation pending or, to the
knowledge of the Issuers, threatened (or any basis therefor known to the
Issuers) against or affecting either the Holding Company or any of its
Subsidiaries which (a) questions the validity of any of the Operative Documents
or any action taken or to be taken pursuant thereto or (b) has resulted in, or
could reasonably be expected to result in, a Material Adverse Change. There is
no outstanding judgment, decree or order against or affecting either the Holding
Company or any of its Subsidiaries which has resulted in, or could reasonably be
expected to result in, a Material Adverse Change.
5.12. Valid and Binding Obligations; Compliance with Other Instruments;
Absence of Restrictions, etc.
(a) This Agreement has been duly authorized, executed and delivered
by each Issuer and constitutes the valid and legally binding obligation of
each Issuer enforceable against each Issuer in accordance with its terms,
except that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or similar
laws of general application now or hereafter in effect affecting the
rights and remedies of creditors and by general equity principles
(regardless of whether enforcement is sought in a proceeding at law or in
equity). Each of the other Operative Documents to which the Holding
Company or any of its Subsidiaries is (or is to be) a party has been duly
authorized by the Holding Company or such Subsidiary, as the case may be,
and,
71
when executed and delivered, will constitute the valid and legally binding
obligation of the Holding Company or such Subsidiary, as the case may be,
enforceable against it in accordance with its terms, except that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
application now or hereafter in effect affecting the rights and remedies
of creditors and by general equity principles (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(b) Neither the Holding Company nor any of its Subsidiaries is in
violation of or in default under any term of its Organizational Documents,
or of any agreement, document, instrument, judgment, decree, order, law,
statute, rule or regulation applicable to it or any of its properties and
assets, in any way which has resulted in, or could reasonably be expected
to result in, a Material Adverse Change. Without limiting the generality
of the foregoing, the Holding Company and each of its Subsidiaries is in
compliance with (and neither it nor any of its predecessors in interest
has received any notice to the contrary) and there is no reasonable
possibility of any liability of or any judgment, decree or order binding
upon or applicable to any such Person or any of its properties or assets
under or on account of, any Environmental Laws, except where the same has
not resulted in, and could not reasonably be expected to result in, a
Material Adverse Change.
(c) The execution, delivery and performance of and the consummation
of the transactions contemplated by the Operative Documents will not
violate or constitute a default under, or permit any Person to accelerate
or to require the prepayment of any Indebtedness of the Holding Company or
any of its Subsidiaries or to terminate any lease or agreement of the
Holding Company or any of its Subsidiaries pursuant to, or result in the
creation of any Lien (other than the Liens created by the Fleet Bank
Documents) upon any of the properties or assets of the Holding Company or
any of its Subsidiaries pursuant to, any term of the Organizational
Documents of the Holding Company or any of its Subsidiaries or of any
agreement, document, instrument, judgment, decree, order, law, statute,
rule or regulation applicable to the Holding Company or any of its
Subsidiaries or any of their respective properties and assets.
(d) Neither the Holding Company nor any of its Subsidiaries is a
party to or bound by or subject to any Organizational Document, or any
agreement, document, instrument, judgment, decree, order, law, statute,
rule or regulation (other than the Operative Documents and the Fleet Bank
Documents and laws, statutes, rules or regulations affecting businesses
generally): (i) which restricts its right or ability to incur
Indebtedness, to issue securities or to consummate the transactions
contemplated hereby; (ii) under the terms of or pursuant to which its
obligation to pay all amounts due from it and/or to perform all
obligations imposed on it and/or to comply with the terms applicable to it
under any of the Operative Documents is in any way restricted; or (iii)
which restricts its right or ability to pay dividends and/or to make any
other distributions in respect of its Shares, to mortgage or dispose of
its properties, to consummate any merger, consolidation or acquisition, to
make Investments or capital expenditures, to enter into and perform
leases, to pay executive compensation and/or to conduct its business as
now conducted and now proposed to be conducted.
5.13. ERISA.
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(a) The Holding Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for
such instances of noncompliance which have not resulted in, and could not
reasonably be expected to result in, a Material Adverse Change. Neither
the Holding Company nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions
of the Code relating to employee benefit plans (as defined in section 3 of
ERISA), and no event, transaction or condition has occurred or exists that
could reasonably be expected to result in the incurrence of any such
liability by the Holding Company or any ERISA Affiliate, or in the
imposition of any Lien on any of the rights, properties or assets of the
Holding Company or any ERISA Affiliate, in either case pursuant to Title I
or IV of ERISA or to such penalty or excise tax provisions or to section
401(a)(29) or 412 of the Code, other than such liabilities or Liens as
would not individually or in the aggregate result in a Material Adverse
Change.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the
end of such Plan's most recently ended plan year on the basis of the
actuarial assumptions specified for funding purposes in such Plan's most
recent actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such benefit liabilities.
The term "benefit liabilities" has the meaning specified in section 4001
of ERISA and the terms "current value" and "present value" have the
meaning specified in section 3 of ERISA.
(c) Neither the Holding Company nor any of the ERISA Affiliates has
incurred withdrawal liabilities (or are subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate is likely to
result in a Material Adverse Change. The Holding Company and each ERISA
Affiliate have made all required contributions to Multiemployer Plans.
Neither the Holding Company nor any ERISA Affiliate has incurred, nor
would reasonably expect to incur, any Withdrawal Liability upon a complete
or partial withdrawal from any Multiemployer Plan that individually or in
the aggregate is likely to result in a Material Adverse Change. To the
knowledge of the Issuers, no Multiemployer Plan is, or is reasonably
expected to be, insolvent, in reorganization or terminated within the
meaning of Title IV of ERISA.
(d) Except as set forth on Exhibit 5.13 attached hereto, neither the
Holding Company nor any of its Subsidiaries has any expected
postretirement benefit obligation (determined in accordance with Financial
Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section
4980B of the Code).
(e) The consummation of the transactions contemplated by the
Operative Documents will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax
could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The
representation by the Holding Company in the first sentence of this
section 5.13(e) is made in reliance upon and subject to the accuracy of
your representation in section 25(b) as to the sources of the funds used
to pay the purchase price of the Securities to be purchased by you.
73
5.14. Consents, etc. No consent, approval or authorization of, or
declaration or filing with, or other action by, any Person (including, without
limitation, any governmental authority) is required on the part of the Holding
Company or any of its Subsidiaries as a condition precedent to the valid
execution, delivery and performance of and the consummation of the transactions
contemplated by the Operative Documents and/or the exercise by any holder of any
Securities of any of its rights in respect thereof, including, without
limitation, the Acquisition, other than (a) those specified on Exhibit 5.14
attached hereto, all of which, if related to the Acquisition or the transactions
to be consummated in connection therewith, shall have been obtained and are
unconditional, in full force and effect and not subject to appeal or review, and
(b) other consents which, if not obtained, could not reasonably be expected to
result in a Material Adverse Change. Without limiting the generality of the
foregoing, all filings under the Xxxxxxx Act and the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 required in connection with the Acquisition have been
made and the "waiting period" under such Acts has expired or been terminated.
5.15. Proprietary Rights; Licenses. The Holding Company and each of its
Subsidiaries have all Proprietary Rights and Licenses as are necessary for the
conduct of their respective businesses as now conducted and now proposed to be
conducted, without any known conflict with the rights of others, except where
the failure to have any such Proprietary Right and/or License has not resulted
in, and could not reasonably be expected to result in, a Material Adverse
Change. Each such Proprietary Right and License is in full force and effect, all
material obligations with respect thereto have been fulfilled and performed and,
to the knowledge of the Issuers, there is no material infringement thereon by
any other Person. No default in the performance or observance by the Holding
Company or any of its Subsidiaries (or any of their predecessors in interest) of
its obligations thereunder has occurred which permits, or after notice of lapse
of time or both would permit, the revocation or termination of any Proprietary
Right or License which has resulted in, or could reasonably be expected to
result in, a Material Adverse Change.
5.16. Offer of Securities; Investment Bankers. Neither the Holding Company
nor any of its Subsidiaries nor any Person acting on its behalf (a) has directly
or indirectly offered the Securities or any part thereof or any similar
securities for issue or sale to, or solicited any offer to buy any of the same
from, anyone other than you, the Other Purchasers and not more than 20 other
institutional investors, (b) has taken or will take any action which would bring
the issuance and sale of the Securities within the provisions of Section 5 of
the Securities Act or the registration or qualification provisions of any
applicable blue sky or other securities laws, (c) has dealt with any broker,
finder, commission agent or other similar Person in connection with the sale of
the Securities and the other transactions contemplated by the Operative
Documents, other than Fleet Corporate Finance, or (d) is under any obligation to
pay any broker's fee, finder's fee or commission in connection with such
transactions, other than fees to Fleet Corporate Finance, which fees are the
obligation solely of the Issuers.
5.17. Government Regulation. Neither the Holding Company nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act or the Investment Company Act of 1940, each
as amended.
5.18. Disclosure. Neither this Agreement, nor any of the other Operative
Documents nor the Disclosure Documents, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading in the light of the
circumstances under which such statements were made, it being
74
understood that, except as set forth in section 5.6, no representation or
warranty is made with respect to any projections or other prospective financial
information. There is no fact known to any of the Issuers (other than
information concerning general economic conditions known to the public
generally) which has resulted in, or could reasonably be expected to result in,
a Material Adverse Change which has not been set forth in this Agreement, the
other Operative Documents and the Disclosure Documents.
5.19. Labor Relations; Suppliers, Distributors and Customers. No dispute
involving employees of the Holding Company or any of its Subsidiaries or their
respective relationships with their respective employees has resulted in, or
could reasonably be expected to result in, any Material Adverse Change. The
relationships with the suppliers to and distributors for and customers of the
Holding Company and its Subsidiaries are satisfactory commercial working
relationships and, during the 12-month period ended on the Closing Date, no such
supplier, distributor or customer has cancelled or otherwise terminated its
relationship with or decreased its services, supplies or materials to or its
usage or purchase of the services or products of the Holding Company or any of
its Subsidiaries in a manner which has resulted in, or could reasonably be
expected to result in, a Material Adverse Change. The Holding Company is not
aware of any intention of any such supplier, distributor or customer to take any
such action.
6. Use of Proceeds; Regulation U, etc.
(a) The proceeds of the sale of the Securities (together with loan
proceeds under the Fleet Bank Documents received by the Holding Company at
the Closing) will be used on the Closing Date to make the payments to the
Persons and for the purposes specified on Exhibit 6 attached hereto.
(b) Neither the Holding Company nor any of its Subsidiaries owns, or
will use, directly or indirectly, any part of the proceeds of the sale of
the Securities for the purpose of purchasing or carrying, any "margin
stock" within the meaning of Regulation U (12 CFR Part 221) of the Board
of Governors of the Federal Reserve System (herein called a "margin
security") or for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any margin security or
for any other purpose which might constitute the transactions contemplated
by the Operative Documents a "purpose credit" within the meaning of said
Regulation U or cause this Agreement or any of the other Operative
Documents to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System, or the Exchange Act or any other
applicable law, statute, regulation, rule, order or restriction.
7. Financial Statements and Information. The Holding Company will furnish to you
in duplicate, so long as you shall be obligated to purchase Securities hereunder
or shall hold any of the Securities, and to each other institutional holder from
time to time of the Securities:
(a) within 60 days after the end of each of the first three
quarterly accounting periods in each fiscal year of the Holding Company,
the consolidated and consolidating balance sheets of the Holding Company
and its Subsidiaries as at the end of such period and the related
consolidated and consolidating statements of income, changes in
stockholders' equity and cash flows for such period and for the portion of
such fiscal year ended on the last day of such period, in each case
setting forth in comparative form the corresponding figures for the same
period and portion of the next preceding fiscal year, provided that the
delivery by the Holding Company of a true and complete copy of its
75
Form 10-Q report as filed with the Commission (or any analogous foreign
governmental authority) or any securities exchange within the time period
specified by the Commission (or such foreign governmental authority) or
such securities exchange shall be deemed compliance with the requirements
of this section 7(a);
(b) within 120 days after the end of each fiscal year of the Holding
Company, the consolidated and consolidating balance sheets of the Holding
Company and its Subsidiaries as at the end of such year and the related
consolidated and consolidating statements of income, changes in
stockholders' equity and cash flows for such year, in each case setting
forth in comparative form the corresponding figures for the next preceding
fiscal year and the corresponding figures from the budget for such fiscal
year, all in reasonable detail and accompanied by the standard unqualified
report on such consolidated financial statements of the Holding Company
and its Subsidiaries of Price Waterhouse LLP (or other accountants of
recognized national standing selected by the Holding Company, provided
that the delivery by the Holding Company of a true and complete copy of
its Form 10-K report as filed with the Commission (or any analogous
foreign governmental authority) or any securities exchange within the time
period specified by the Commission (or such foreign governmental
authority) or such securities exchange shall be deemed compliance with the
requirements of this section 7(b) other than clause (iv) hereof, which
report shall (i) state that the audit of such accountants in connection
with such consolidated financial statements has been conducted in
accordance with generally accepted auditing standards and that such
accountants believe that such audit provides a reasonable basis for their
opinion, (ii) contain the other statements required from time to time by
the American Institute of Certified Public Accountants for an auditor's
standard unqualified opinion (and shall not contain any additional
explanatory paragraph concerning uncertainties or other matters), (iii)
include the opinion of such accountants that such consolidated financial
statements present fairly in all material respects the consolidated
financial position of the Holding Company and its Subsidiaries as at the
end of such fiscal year and the consolidated results of operations and
cash flows for such fiscal year, in conformity with GAAP, and (iv) be
accompanied by a separate certificate from such accountants which shall
state (A) that such accountants are familiar with the terms of the
Operative Documents and provide negative assurance relative to compliance
with the applicable covenants of the Operative Documents as they relate to
accounting matters and (B) whether or not their examination has disclosed
the existence, during or at the end of the fiscal year covered by such
financial statements and/or the date of such certificate, of (x) any
"reportable condition" (as defined in Statement on Auditing Standards No.
60 issued by the Auditing Standards Board of the American Institute of
Certified Public Accountants) in the internal control structure of the
Holding Company or any of its Subsidiaries, (y) any Change of Control or
(z) any Default or Event of Default and, if their examination has
disclosed such a condition or event, specifying in reasonable detail the
nature and period of existence thereof;
(c) together with each delivery of financial statements pursuant to
sections 7(a) and 7(b), an Officer's Certificate which shall:
(i) certify that such financial statements have been prepared
in accordance with GAAP (subject, in the case of any unaudited
financial statements, to normal year-end and audit adjustments and
the omission of footnotes) applied on a consistent basis throughout
the periods covered thereby and present fairly in all material
respects the consolidated financial position
76
and the consolidated results of operations and cash flows of the
Holding Company and its Subsidiaries as at the end of and for the
periods covered thereby in conformity with GAAP (subject, in the
case of any unaudited financial statements, to normal year-end and
audit adjustments and the omission of footnotes);
(ii) state that, after due inquiry, the signers do not have
knowledge of the existence, during the fiscal period covered by such
financial statements or as at the date of such Officer's
Certificate, of (A) any "reportable condition" (as defined in
Statement on Auditing Standards No. 60 issued by the Auditing
Standards Board of the American Institute of Certified Public
Accountants) in the internal control structure of the Holding
Company or any of its Subsidiaries, (B) any Change of Control or (C)
any Default or Event of Default, or, if such is not the case,
specifying in reasonable detail the nature and period of existence
thereof and what action the Holding Company or the applicable
Subsidiary has taken, is taking and proposes to take with respect
thereto;
(iii) in the case of each such Officers' Certificate
accompanying the quarterly financial statements delivered pursuant
to section 7(a) and the annual financial statements delivered
pursuant to section 7(b):
(A) show in reasonable detail all computations required
to demonstrate compliance, during and at the end of the fiscal
period covered by such financial statements, with the
provisions of section 13.5, 13.6, and 13.14; and
(B) unless already included in the relevant Form 10-Q
report or 10-K report delivered pursuant hereto, include in
reasonable detail management's discussion and analysis of the
results of operations and the financial condition of the
Holding Company and its Subsidiaries as at the end of and for
the fiscal period covered by such financial statements; and
(iv) if there shall exist any Subsidiary of the Holding
Company as of the date of such Officer's Certificate which did not
exist as of the date of the last Officer's Certificate delivered
pursuant to this section 7(c), specify with respect to each such
Subsidiary the information called for by Exhibit 7(c)(iv), contain a
brief description of the nature of each such Subsidiary's business
and certify that each such new Subsidiary has executed and delivered
pursuant to section 13.17 a Note Guarantee to each holder of any
Notes;
(d) as promptly as practicable (but in any event not later than
five Business Days) after receipt thereof, copies of all material reports
or written comments (including, without limitations, audit reports,
so-called management letters and any other reports or communications with
respect to the internal control structure of the Company or any of its
Subsidiaries) submitted by independent accountants or other management
consultants;
(e) at such time as any securities of the Holding Company or any of
its Subsidiaries are publicly held, as promptly as practicable (but in any
event not later than five Business Days) after the same are available,
copies of (i) all material press releases issued by the Holding Company or
any Subsidiary of the Holding Company, and all notices, proxy statements,
financial statements, reports and documents as the Holding
77
Company shall send or make available generally to its stockholders or as
any Subsidiary of the Holding Company shall send or make available
generally to its stockholders, other than the Holding Company, and (ii)
all periodic and special reports, documents and registration statements
(other than on Form S-8) which the Holding Company or any Subsidiary of
the Holding Company furnishes or files, or any officer, director or
stockholder of the Holding Company or any of its Subsidiaries furnishes or
files with respect to the Holding Company or any of its Subsidiaries, with
the Commission (or any analogous foreign governmental authority) or any
securities exchange, excluding the Forms 3, 4 and 5 filed by directors,
officers and 10% stockholders of the Holding Company;
(f) as promptly as practicable (but in any event not later than five
Business Days) after any officer or senior management employee of the
Holding Company or any of its Subsidiaries becomes aware of the occurrence
of any of the following conditions or events, an Officer's Certificate
specifying in reasonable detail the nature and period of existence
thereof, what action the Holding Company or any of its Subsidiaries has
taken, is taking and proposes to take with respect thereto: (i) with
respect to any Plan, any reportable event, as defined in section 4043(b)
of ERISA and the regulations thereunder, for which notice thereof has not
been waived pursuant to such regulations as in effect on the date hereof;
(ii) the taking by the PBGC of steps to institute, or the threatening by
the PBGC of the institution of, proceedings under section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Holding Company or any ERISA Affiliate of a
notice from a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan; or (iii) any event,
transaction or condition that could result in the incurrence of any
liability by the Holding Company or any ERISA Affiliate pursuant to Title
I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on
any of the rights, properties or assets of the Holding Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, has resulted in, or could
reasonably be expected to result in, a Material Adverse Change;
(g) as promptly as practicable (but in any event not later than
three Business Days) after any officer or senior management employee of
the Holding Company or any of its Subsidiaries obtains knowledge of the
occurrence of any Default or Event of Default, or of any condition or
event which has resulted in, or could reasonably be expected to result in,
a Material Adverse Change, an Officer's Certificate specifying in
reasonable detail the nature and period of existence thereof, what action
the Holding Company or any of its Subsidiaries has taken, is taking and
proposes to take with respect thereto and the date, if any, on which it is
estimated the same will be remedied;
(h) as promptly as practicable (but in any event not later than 30
days) after the end of each fiscal year of the Holding Company, an annual
budget prepared on a monthly basis for the Holding Company and its
Subsidiaries for the succeeding fiscal year and, promptly upon preparation
thereof, any other significant budgets which the Holding Company or any of
its Subsidiaries prepares and any revisions of such annual or other
budgets;
78
(i) as promptly as practicable (but in any event not later than five
Business Days) after the occurrence of any condemnation, taking or
destruction of or damage to (whether or not covered by insurance) any
properties or assets of the Holding Company or any of its Subsidiaries
having a value in excess of $500,000, an Officer's Certificate specifying
in reasonable detail the nature of such event, what action the Holding
Company or any of its Subsidiaries has taken, is taking and proposes to
take with respect thereto and the date, if any, on which it is estimated
the same will be remedied;
(j) as promptly as practicable (but in any event not later than five
Business Days) after receipt thereof, copies of all material notices and
communications given or received by the Holding Company or any of its
Subsidiaries under the Acquisition Documents (including, without
limitation, copies of (i) all documents related to adjustments to the
consideration paid under the Acquisition Agreement and (ii) all notices
and communications relating to claims of breaches and defaults and claims
for indemnification given or received by the Holding Company or any of its
Subsidiaries), or any of the other agreements, documents and instruments
referred to in section 4.3;
(k) such other material information relating to the Holding Company
or any of its Subsidiaries as shall be furnished to any bank, financial
institution or other Person to which the Holding Company or any of its
Subsidiaries is indebted for borrowed money or for any letters of credit
or similar instruments (other than information relating solely to
collateral therefor); and
(l) such other information as from time to time may reasonably be
requested by the Required Holders of any class of Securities.
8. Inspection; Board Visitation Rights; Confidentiality.
(a) The Holding Company will permit any Person designated by you and
the Other Purchasers on reasonable notice, during regular business hours
(unless a Default or Event of Default shall have occurred and be
continuing, in which case, at any time) and at your and the Other
Purchasers' expense (unless a Default or Event of Default shall have
occurred and be continuing, in which case, at the Holding Company's
expense), to visit and inspect any of the properties of the Holding
Company and its Subsidiaries, to examine their books and records (and to
make copies thereof) and to discuss their affairs, finances and accounts
with and to be advised as to the same by, their directors, officers,
consultants, counsel and accountants, all at such intervals as you and the
Other Purchasers may desire (but not more frequently than twice in any
fiscal year, unless a Default or Event of Default shall have occurred and
be continuing, in which case, as frequently as you and the Other
Purchasers may request). Representatives of the Holding Company and its
Subsidiaries may be present at any such meeting.
(b) You and the Other Purchasers shall have the right, as a group,
to appoint one representative who shall: (a) receive notice of all
meetings (both regular and special) of the board of directors of the
Holding Company and each committee thereof (such notice to be delivered or
mailed as specified in section 22 at the same time as notice is given to
the members of such board and/or committee); (b) receive all notices,
information and reports which are furnished to the members of such board
and/or committee at the same time and in the same manner as the same is
furnished to such members; and (c) receive as soon as available (but in
any event prior to the next
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succeeding meeting of such board and/or committee) copies of the minutes
of all such meetings. If any action is proposed to be taken after the
Closing by such board and/or committee by written consent in lieu of a
meeting, the Holding Company will give written notice thereof to such
representative, which notice shall describe in reasonable detail the
nature and substance of such proposed action and shall be delivered or
mailed as specified in section 22 at the same time as notice is given to
the members of such board and/or committee (but in no event later than
seven days prior to the date upon which such action is proposed to be
taken). The Holding Company will furnish such representative with a copy
of each such written consent not later than five days after it has been
signed by its last signatory. Such representative shall not constitute a
member of such board and/or committee and shall not be entitled to vote on
any matters presented at meetings of such board and/or committee or to
consent to any matter as to which the consent of any such board and/or
committee shall have been requested. The board of directors (or other
governing board) of the Holding Company shall meet not less frequently
than three (3) times during each fiscal year of the Holding Company.
(c) Each holder of any Securities agrees by its acceptance thereof
that any non-public information concerning the Holding Company and its
Subsidiaries which is furnished by the Holding Company to such holder
pursuant to this Agreement or any of the other Operative Documents
(collectively "Confidential Information") shall be kept confidential by
such holder in accordance with procedures adopted by such holder in good
faith to protect confidential information of third parties. The term
"Confidential Information" shall not include, however, any information
which (x) was publicly known or otherwise known to any holder at the time
of disclosure by the Holding Company to any holder; (y) subsequently
becomes publicly known through no act or omission of any holder or any
agent of any holder or (z) becomes known to any holder otherwise than
through disclosure by the Holding Company. Notwithstanding the foregoing,
each holder of any Securities may disclose Confidential Information: (i)
with the consent of the Holding Company (which shall not be unreasonably
withheld or delayed); (ii) when required by law or regulation; (iii) in
any report, statement or testimony submitted by such holder to any
regulatory body having or claiming to have jurisdiction over such holder;
(iv) to the National Association of Insurance Commissioners or any similar
organization or to any rating agency; (v) to the officers, directors,
employees, agents, representatives and professional consultants of such
holder and of such holder's Affiliates who have a need to know such
information; (vi) in connection with the preservation, exercise and/or
enforcement of any of such holder's rights or remedies under this
Agreement and the other Operative Documents; (vii) in connection with any
contemplated transfer of any of the Securities held by such holder to any
institutional investor or financial institution (so long as the recipient
of such information agrees to keep such information confidential on terms
substantially similar to those set forth in this section 8(c)); (viii) in
a response to any summons, subpoena or other legal process or in
connection with any judicial or administrative proceeding or inquiry; or
(ix) to correct any false or misleading information which may become
public concerning the relationship of such holder to the Holding Company
or any of its Subsidiaries and/or the transactions contemplated hereby.
9. Prepayment of Notes.
9.1. Required Prepayment Without Premium of Notes. In addition to paying
the entire outstanding principal amount of and the interest due on the Notes on
the maturity date thereof, on
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each of April 17, 2003 and April 17, 2004, the Obligor will prepay without
premium $3,666,667 aggregate principal amount of the Notes. In addition, on
April 17, 2003, the Obligor will prepay without premium the aggregate principal
amount of the Notes which represent Capitalized Interest (as such term is
defined in the Notes). No partial prepayment of the Notes pursuant to section
9.2 or any other provision of this Agreement shall alter the obligation of the
Obligor to make the required prepayments provided for in this section 9.1.
9.2. Optional Prepayment With Premium of Notes. At any time and from time
to time after April 17, 1999, the Obligor may, at its option, upon notice as set
forth in section 9.5, prepay all or any part (in an integral multiple of
$100,000 and a minimum of $500,000 or such lesser principal amount thereof as
shall then be outstanding) of the Notes, upon the concurrent payment of either
(i) an amount equal to the Make Whole Amount, in the event that the Warrant
Exchange shall not have occurred before April 17, 1999, or (ii) a premium (a
percentage of the principal amount so prepaid pursuant to this section 9.2) (the
"Applicable Premium"), in the event that the Warrant Exchange shall have
occurred before April 17, 1999, such percentage to be that set forth in the
following table opposite the period in which the date fixed for such prepayment
occurs:
Applicable
Period Premium
------ -------
April 18, 1999 through April 17, 2000 4.0%
April 18, 2000 through April 17, 2001 3.0%
April 18, 2001 through April 17, 2002 2.0%
April 18, 2002 through April 17, 2003 1.0%
April 18, 2003 and thereafter 0.0%
Any partial prepayment of Notes pursuant to this section 9.2 shall be applied to
the payment of installments of principal of the Notes in inverse order of
maturity.
9.3. Prepayment Without Premium of the Notes at the Option of Holders of
Notes upon a Change of Control.
(a) If any Change of Control is to occur, then not less than 30 days
nor more than 60 days prior to the occurrence of such Change of Control,
the Issuers will notify each holder of any Notes of such pending Change of
Control and the date upon which it is scheduled to occur. If the Required
Holders of the Notes then outstanding furnish a written request for
prepayment to the Obligor (in accordance with section 22) not more than 90
days after receipt by such holders of such notice of such Change of
Control from the Issuers, the Obligor will prepay without premium all of
the Notes then outstanding. Each such prepayment shall occur on the date
upon which the Change of Control occurs, unless the Obligor and the
Required Holders of the Notes agree to a different date, and no prepayment
requested pursuant to this section 9.3 shall be due unless the Change of
Control shall occur.
(b) Each notice from the Issuers pursuant to this section 9.3 shall
make explicit reference to this section 9.3 and shall state that the right
of the Required Holders of the Notes then outstanding to require
prepayment thereof must be exercised within 90 days of the receipt of such
notice.
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9.4. Allocation of Partial Prepayments of Notes. In the case of each
partial prepayment of the Notes under this section 9, the principal amount of
the Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding (excluding any Notes at the time owned by the Holding Company or any
Affiliate of the Holding Company) in proportion, as nearly as practicable, to
the respective unpaid principal amounts thereof, with adjustments, to the extent
practicable, to compensate for any prior prepayments not made exactly in such
proportion.
9.5. Notice of Optional Prepayments of Notes. In the case of each
prepayment of the Notes under section 9.2, the Obligor shall give written notice
thereof to each holder of Notes being prepaid not less than 10 nor more than 30
days prior to the date fixed for such prepayment. Each such notice shall set
forth: (a) the date fixed for prepayment; (b) the aggregate principal amount of
Notes to be prepaid on such date; and (c) the aggregate principal amount of
Notes held by such holder to be prepaid on such date and the amount of accrued
interest and an estimation of the Make Whole Amount or Applicable Premium, as
applicable, to be paid to such holder on such date (together with the
calculation of such Make Whole Amount or Applicable Premium, as applicable,
which calculation shall be satisfactory to each holder of the Notes to be so
prepaid). Any such notice of optional prepayment may be rescinded and the
Obligor shall have the right, through the date fixed for such optional
prepayment, to cancel such optional prepayment.
9.6. Maturity; Accrued Interest; Surrender, etc. of Notes. In the case of
each prepayment of all or any part of any Note, the principal amount to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the premium, if any, due thereon. Any Note prepaid in full shall be
surrendered to the Obligor at the Obligor's principal place of business promptly
following prepayment and canceled and shall not be reissued, and no Note shall
be issued in lieu of any prepaid principal amount of any Note.
9.7. Purchase of Notes. The Obligor will not, and will not permit any of
its Affiliates to, directly or indirectly, purchase or otherwise acquire, or
offer to purchase or otherwise acquire, any outstanding Notes except by way of
payment or prepayment in accordance with the provisions of the Notes and this
Agreement.
9.8. Payment on Non-Business Days. If any amount hereunder or under the
Notes shall become due on a day which is not a Business Day, such payment shall
be due on the next succeeding Business Day without including the additional
day(s) elapsed in the computation of the interest payable on such next
succeeding Business Day.
9.9. Application of Notes in Satisfaction of Exercise Price of Warrants.
In the event that any holder of any Note shall apply all or any portion of the
principal amount of such Notes in satisfaction (in whole or in part) of the
payment of the Exercise Price (as defined in the Warrants), any partial
application of the principal amount of any such Note shall be applied to the
payment of installments of principal due thereunder in order of maturity. No
such application of principal to the payment of the Exercise Price shall
constitute a prepayment which requires the payment of any prepayment premium.
10. Subordination of Notes and Note Guarantees. The payment of the Notes and
Note Guarantees and the rights of the holders thereof are subordinated to the
payment of the Superior Indebtedness (as defined in the Notes) and the rights of
the holders thereof upon the terms of subordination set forth in the Notes.
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11. Securities Act Matters; Option Plans.
(a) The Holding Company will take, or will cause to be taken, such
action as any holder of Securities may reasonably request from time to
time to facilitate any sale or disposition by any such holder of any
Securities without registration under the Securities Act and/or any
applicable securities laws within the limitation of the exemptions
provided by any rule or regulation thereunder, including, without
limitation, Rule 144A under the Securities Act.
(b) Exhibit 5.5 sets forth a true and complete description of the
Tridex Corporation 1997 Long Term Incentive Plan, the Tridex Corporation
Non-Employee Directors' Stock Plan and the proposed Tridex 1998
Corporation Non-Executive Long Term Incentive Plan, pursuant to which
employees and non-employee directors of the Holding Company and its
Subsidiaries have been and may be issued Common Stock (or options
therefor), which option plans are hereinafter called the "Option Plans."
You agree that pursuant to the Option Plans the Holding Company may issue,
or grant options or other rights to purchase, up to 744,306 shares of
Common Stock at purchase or exercise prices less than the Exercise Price
under the Warrants and that such issuance or grant shall not cause any
adjustment in the Exercise Price under the Warrants.
12. Registration Rights.
12.1. Registration on Request.
(a) In case the Holding Company shall receive from the Required
Holders of any Registrable Shares a written request or requests that the
Holding Company effect any registration, qualification and/or compliance
of any Registrable Shares held by (or issuable to) such holder or holders,
and specifying the intended method of offering, sale and distribution, the
Holding Company will:
(i) promptly give written notice of the proposed registration,
qualification and/or compliance to each holder of any Registrable
Shares; and
(ii) as soon as practicable, effect such registration,
qualification and/or compliance (including, without limitation, the
execution of an undertaking for post-effective amendments,
appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with exemptive
regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and
as would permit or facilitate the sale and distribution of such
amount of Registrable Shares as is specified in a written request or
requests, made within 60 days after receipt of such written notice
from the Holding Company, by any holder or holders of any
Registrable Shares.
(b) The obligations of the Holding Company under this section 12.1
are subject to the following qualifications:
(i) except as provided in section 12.1(b)(vi), the Holding
Company shall only be obligated to effect one registration pursuant
to this section 12.1;
83
(ii) the Holding Company shall not be obligated to effect any
registration pursuant to this section 12.1 unless it shall have been
(A) requested to do so by the holder or holders of a majority of the
Registrable Shares at the time issued (and issuable) and (B)
requested to effect the registration of Registrable Shares having an
aggregate Fair Value of not less than $2,000,000;
(iii) the Holding Company shall not be obligated to cause any
registration statement relating to a registration effected pursuant
to this section 12.1 to become effective prior to April 17, 1999;
(iv) the Holding Company shall not include in any
registration, qualification or compliance requested pursuant to this
section 12.1 any other securities (including, without limitation,
those to be issued and sold by the Holding Company) without the
prior written consent of the holder or holders of a majority of the
Registrable Shares to be included in such registration,
qualification or compliance;
(v) the Holding Company shall pay all Registration Expenses
related to any registration, qualification and compliance requested
pursuant to this section 12.1;
(vi) if, in connection with any registration of Registrable
Shares pursuant to this section 12.1, the holders of Registrable
Shares requesting registration are unable for any reason to include
in such registration all of the Registrable Shares for which
registration has been requested, then the holder or holders of the
Registrable Shares shall be entitled to additional registrations of
Registrable Shares pursuant to this section 12.1, sufficient to
permit the holders of the Registrable Shares to register all of the
Registrable Shares, provided, however, that in the event that any
Registrable Shares are not so registered as a result of the
imposition by the managing underwriter(s) of any underwritten
offering pursuant to this section 12.1 of a limitation on the number
of Registrable Shares which may be included in any such
registration, the holders of such Registrable Shares shall be
limited to one additional registration of Registrable Shares
pursuant to this section 12.1; and
(vii) if the Holding Company shall furnish to each holder of
Registrable Shares an Officer's Certificate certifying that the
Holding Company has determined, as evidenced by a written resolution
of the board of directors of the Holding Company, that it is
necessary to delay the filing of the registration statement because
such a filing at the time requested, or the offering of securities
pursuant thereto, would materially interfere with any pending
material transaction to which the Holding Company is a party, the
Holding Company shall have the right to delay such filing for a
period ending not more than 135 days after the first date upon which
it shall have received a written request for such registration from
the holder or holders of a majority of the Registrable Shares at the
time issued (and issuable); provided that (A) the Holding Company
may not exercise this right to delay the filing of a registration
statement on more than one occasion in any 12 month period and (B)
the Holding Company shall reimburse each holder of Registrable
Shares for all expenses (including, without limitation, fees,
84
expenses and disbursements of counsel) incurred in connection with
any such registration prior to receipt of any such Officer's
Certificate.
12.2. Incidental Registration.
(a) If the Holding Company at any time or from time to time shall
determine to effect the registration, qualification and/or compliance of
any of its Shares (whether in connection with an offering by the Holding
Company or others) (otherwise than pursuant to a registration on a form
inappropriate for an underwritten public offering or relating solely to
securities to be issued in a merger, acquisition of the stock or assets of
another entity or in a similar transaction), then, in each such case, the
Holding Company will:
(i) promptly give written notice of the proposed registration,
qualification and/or compliance (which shall (A) specify if such
registration shall involve an underwritten offering and (B) include
a list of the jurisdictions in which the Holding Company intends to
register or qualify such securities under the applicable blue sky or
other state securities laws) to each holder of any Registrable
Shares; and
(ii) use its commercially reasonable best efforts to include
among the Shares which it then registers or qualifies all
Registrable Shares specified by any holder thereof in a written
request or requests, made within 30 days after receipt of such
written notice from the Holding Company.
(b) The obligations of the Holding Company under this section 12.2
are subject to the following qualifications:
(i) the Holding Company shall pay all Registration Expenses
related to any registration, qualification or compliance requested
pursuant to this section 12.2;
(ii) if, in connection with any underwritten offering pursuant
to this section 12.2, the managing underwriter(s) shall impose a
limitation on the number or kind of securities which may be included
in any such registration because, in its reasonable judgment, such
limitation is necessary to effect an orderly public distribution,
then the Holding Company shall be obligated to include in such
registration statement only such limited portion of the Registrable
Shares (which may be none) as is determined in good faith by such
managing underwriter, provided that, if any securities are being
offered for the account of any Person other than the Holding Company
and the holders of the Registrable Shares, the reduction in the
number of Registrable Shares included in such registration shall not
represent a greater percentage of the amount of Registrable Shares
originally requested to be registered and sold in such registration
than the lowest such percentage reduction imposed upon any other
Person;
(iii) in the case of any underwritten offering, the right of
any holder of Registrable Shares to participate in such offering
shall be conditioned upon such holder's entering into an
underwriting agreement in customary form (and containing other terms
and provisions consistent herewith) with the representative(s) of
the underwriter(s) selected by the Holding Company; and
85
(iv) in the case of any offering effected pursuant to the
demand registration rights granted to the Seller in connection with
the Acquisition, the rights of the holders of Registrable Shares to
participate in such offering shall be subject to rights of the
Seller to limit the number of Registrable Shares which may be
included in any such registration. The Holding Company hereby agrees
to use its commercially reasonable best efforts to cause the Seller
to include the Registrable Shares in any such registration.
12.3. Permitted Registration. If and to the extent that any holder or
holders of any Registrable Shares shall have, at the time of delivery of the
written request referred to in section 12.2, no present intention of selling or
distributing such securities, the Holding Company shall be obligated to effect
the registration, qualification and compliance of such securities of such holder
or holders only if and to the extent, in each case, that such registration,
qualification and compliance are at the time permitted by the applicable
statutes or rules and regulations thereunder or the practices of the
governmental authority concerned.
12.4. Registration Procedures. In the case of each registration,
qualification and/or compliance contemplated by this section 12, the Holding
Company will keep the holder or holders of Registrable Shares advised in writing
as to the initiation of proceedings for such registration, qualification and
compliance and as to the completion thereof, and will advise each such holder,
upon request, of the progress of such proceedings. In addition, the Holding
Company will follow procedures customarily observed by issuers in registered
public offerings, and accord to the holder or holders of Registrable Shares all
rights (including, without limitation, the right to perform appropriate "due
diligence") customarily accorded to selling stockholders in secondary
distributions and to managing underwriters if the transaction in question is or
were an underwritten public offering. The holders of the Registrable Shares
shall cooperate in the preparation of any registration statement by providing
any information or materials and entering into any customary agreements
(including, without limitation, underwriting agreements) customarily required of
selling security holders in similar transactions. At the expense of the Holding
Company or of the party or parties bearing the expenses of such registration,
qualification and compliance, the Holding Company will (a) keep such
registration, qualification and compliance current and effective by such action
as may be necessary or appropriate, including, without limitation, the filing of
post-effective amendments and supplements to any registration statement or
prospectus, for such period (not to exceed 180 days) as is necessary to permit
the sale and distribution of the Registrable Shares pursuant thereto, (b) take
all necessary action under any applicable blue sky or other state securities law
to permit such sale and/or distribution, all as requested by the holder or
holders of Registrable Shares included therein, provided that the Holding
Company shall not be required to so register or qualify the Registrable Shares
in any jurisdiction if, solely as a result thereof, the Holding Company must
qualify generally to do business therein or consent to general service of
process therein, (c) comply with applicable requirements of all regulatory
entities, including, without limitation, the National Association of Securities
Dealers, Inc., (d) furnish each holder of Registrable Shares included therein
such number of registration statements, prospectuses, supplements, amendments,
offering circulars and other documents incidental thereto as such holder from
time to time may reasonably request, (e) list all Registrable Shares on each
securities exchange on which securities of the same class are then listed and
(f) furnish (or cause to be furnished) to each holder of Registrable Shares, all
undertakings, agreements, certificates, opinions, financial statements and
"comfort letters" of the sort customarily provided to selling stockholders in
secondary distributions and to
86
the managing underwriters, if the transaction in question is or were an
underwritten public offering.
12.5. Indemnification.
(a) Without limiting the generality of section 20, the Holding
Company will indemnify, defend and hold harmless each holder of
Registrable Shares included in any registration, qualification and/or
compliance contemplated by this section 12 and each underwriter of such
securities, and each Person, if any, who controls each such holder and
underwriter within the meaning of the Securities Act, and their respective
directors, officers, employees, agents, advisors and Affiliates (each, an
"Indemnified Person"), to the fullest extent enforceable under applicable
law against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, supplement, amendment, offering circular or other
document related to any registration, qualification or compliance or any
omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or any violation (or alleged violation) of the Securities Act
or other securities laws in connection with any such registration,
qualification or compliance, and will reimburse each such Indemnified
Person for any legal or any other expenses reasonably incurred in
connection with investigating and/or defending (and/or preparing for any
investigation or defense of) any such claim, loss, damage, liability,
action or violation; provided that the Holding Company will not be liable
in any such case to any such Indemnified Person if, but only to the extent
that, any such claim, loss, damage, liability, action, violation or
expense is finally determined to arise out of or result from any untrue
statement in or omission from written information furnished to the Holding
Company by an instrument duly executed by such Indemnified Person and
stated to be specifically for use therein. Each holder of Registrable
Shares will, if securities held by such holder are included in a
registration effected pursuant to this section 12, indemnify, defend and
hold harmless the Holding Company, each of its directors and officers who
signs the related registration statement, and each Person, if any, who
controls the Holding Company within the meaning of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, supplement, amendment, offering circular or other
document or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Holding Company and such
directors, officers or Persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending (and/or
preparing for any investigation or defense of) any such claim, loss,
damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) was made in (or omitted from) such
registration statement, prospectus, supplement, amendment, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Holding Company by an instrument duly
executed by such holder and stated to be specifically for use therein;
provided that the liability of any such holder under this section 12.5
shall be limited to the net sales proceeds actually received by such
holder as a result of the sale by it of securities in such registration.
87
(b) Each party entitled to indemnification under this section 12.5
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the
defense of such claim or any litigation resulting therefrom, provided that
(i) the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
section 12.5, except to the extent of any claim, loss, damage, liability
or expense caused solely by such failure, (ii) counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), (iii) the Indemnified
Party may participate in such defense at such party's expense and (iv) the
Indemnified Party shall be entitled to separate counsel at the expense of
the Indemnifying Party if, in the reasonable opinion of counsel to the
Indemnified Party, there shall exist any conflict of interest (or
potential conflict of interest) between the Indemnified Party and the
Indemnifying Party. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation. Each Indemnified Party
shall furnish such information regarding itself or the claim in question
as an Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(c) If the indemnification provided for in this section 12.5 is
held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any claim, loss, damage, liability or
expense referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such
claim, loss, damage, liability or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party, on
the one hand, or of the Indemnified Party, on the other hand, in
connection with such claim, loss, damage, liability or expense, as well as
any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or
omission.
12.6. Restrictions on Other Agreements. Except as set forth on Exhibit
12.6 attached hereto, the Holding Company will not grant any right relating to
the registration of its securities if the exercise thereof interferes with or is
inconsistent with or will delay (or could reasonably be expected to interfere
with or be inconsistent with or delay) the exercise and enjoyment of any of the
rights granted under this section 12, without the written consent of holders of
66-2/3% or more of the Registrable Shares at the time outstanding, which consent
may be given or withheld in the sole discretion of such holders. The Holding
Company will not permit any of its Subsidiaries to grant any right relating to
the registration of its securities.
88
13. Covenants of the Holding Company. So long as any of the Notes shall remain
outstanding, the Holding Company will duly perform and observe each and all of
the covenants and agreements hereinafter set forth:
13.1. Books of Record and Account; Reserves. The Holding Company will, and
will cause each of its Subsidiaries to, (a) at all times keep proper books of
record and account in which full, true and correct entries shall be made of its
transactions in accordance with GAAP and (b) set aside on its books from its
earnings for each fiscal year all such proper reserves as shall be required in
accordance with GAAP in connection with its business.
13.2. Payment of Taxes; Corporate Existence; Maintenance of Properties;
Compliance with Laws; Lines of Business; Proprietary Rights and Licenses. The
Holding Company will, and will cause each of its Subsidiaries to:
(a) pay and discharge promptly as they become due and payable all
taxes, assessments and other governmental charges or levies imposed upon
it or its income or upon any of its property, as well as all claims of any
kind (including claims for labor, materials and supplies) which, if
unpaid, could reasonably be expected by law to become a Lien upon its
property and could reasonably be expected to result in a Material Adverse
Change; provided that no such Person shall be required to pay any such
tax, assessment, charge, levy or claim if the amount, applicability or
validity thereof shall currently be contested in good faith by appropriate
proceedings promptly initiated and diligently conducted and if it shall
have set aside on its books such reserves, if any, with respect thereto as
are required by GAAP; provided, further, that the Holding Company will,
and will cause each of its Subsidiaries to, pay any such tax, assessment,
charge, levy or claim prior to the commencement of any proceeding to
foreclose any Lien securing the same;
(b) do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence;
(c) maintain and keep its material properties in good repair,
working order and condition (ordinary wear and tear and casualties
excepted);
(d) comply in all respects with all applicable laws, statutes,
rules, regulations and orders of, and all applicable restrictions imposed
by, all governmental authorities in respect of the conduct of its business
and the ownership of its property (including, without limitation, all
Environmental Laws), if the failure to do so could reasonably be expected
to result in a Material Adverse Change; provided that no such Person shall
be required by reason of this section 13.2(d) to comply therewith at any
time while it shall be contesting its obligation to do so in good faith by
appropriate proceedings promptly initiated and diligently conducted, and
if it shall have set aside on its books such reserves, if any, with
respect thereto as are required by GAAP;
(e) engage only in the Business (and lines of business related to
and supportive of the Business), and keep substantially all its assets in
the United States of America; and
(f) own or have a valid license for all material Proprietary Rights
and Licenses used by it in the conduct of its business.
89
13.3. Insurance. The Holding Company will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers,
insurance with respect to its properties and businesses against loss or damage
of the kinds customarily insured against by Persons of established reputation
engaged in the same or a similar business and similarly situated, in such
amounts and by such methods (including deductibles, co-insurance and
self-insurance, if adequate reserves are maintained with respect thereto) as
shall be customary for such Persons and reasonably deemed adequate by the
Holding Company.
13.4. Limitation on Discount or Sale of Receivables. The Holding Company
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, discount or sell any of its accounts receivable, except that any
such Person may settle doubtful accounts or may grant discounts (such as
quantity or prompt payment discounts) in the ordinary course of business.
13.5. Limitation on Funded Debt and Current Debt. The Holding Company will
not, and will not permit any of its Subsidiaries to, be liable or create,
assume, incur, guarantee, or in any manner become liable, contingently or
otherwise, in respect of any Funded Debt or Current Debt other than:
(a) Funded Debt evidenced by the Notes (and Note Guarantees);
(b) Funded Debt and/or Current Debt under (i) the Fleet Bank
Agreement and (ii) other senior credit facilities which the Holding
Company and/or its Subsidiaries may enter into from time to time, provided
that (x) both at the time of and immediately after the establishment of
any such credit facility, no Default or Event of Default shall have
occurred and be continuing, (y) the lender under any such credit facility
shall have agreed in writing that (A) the documents executed and delivered
in connection with such credit facility shall be subject to provisions
identical to those set forth in section 13.16(c) and (B) the Indebtedness
evidenced by the Notes and Note Guarantors shall be subordinate to such
senior credit facility on terms materially identical to the subordination
provisions set forth in the Notes, and (z) the Indebtedness issued
pursuant to such senior credit facility bears interest at market rates
prevailing at its date of issuance and has other terms and conditions no
more restrictive in any material respect upon the Holding Company or any
of its Subsidiaries than those provided in the Fleet Bank Documents, and
provided, further, that the aggregate outstanding principal amount
thereof, including, without limitation, all amounts due (contingently or
otherwise) in respect of reimbursement obligations under letters of
credit, interest rate protection agreements or similar instruments (and
all related reimbursement agreements) does not exceed (1) in the case of
the Fleet Bank Agreement, $20,000,000 plus the interest and other amounts
directly attributable to such principal amount plus the maximum amount of
Indebtedness incurred in respect of the interest rate protection agreement
provided under the Fleet Bank Agreement or (2) in the case of such other
credit facilities, at any time the maximum amount of Consolidated Total
Debt (calculated on a pro forma basis giving effect to the proposed Funded
Debt and/or Current Debt) permitted under section 13.6(c);
(c) Funded Debt and/or Current Debt outstanding on the date hereof
and referred to on Exhibit 5.9 attached hereto (but, in each case, no
renewal, extension, refinancing or refunding of any thereof);
(d) Funded Debt and/or Current Debt under Capital Leases or
consisting of purchase money loans in addition to that permitted pursuant
to section 13.5(c), provided
90
that (i) both at the time of and immediately after giving effect to the
incurrence thereof and the retirement of any Indebtedness which is
concurrently being retired, no Default or Event of Default shall have
occurred and be continuing, (ii) the aggregate outstanding principal
amount of such Funded Debt and Current Debt incurred pursuant to this
section 13.5(d) shall at no time exceed $3,000,000 and (iii) any Liens
securing such Funded Debt and/or Current Debt are permitted under section
13.8(d);
(e) Funded Debt and/or Current Debt incurred to extend, refinance,
refund or renew (the "Refinancing Debt") any other outstanding Funded Debt
and/or Current Debt permitted under this section 13.5 (the "Refinanced
Debt"), provided that:
(i) the aggregate outstanding principal amount of the
Refinancing Debt shall not at any time exceed (A) that of the
Refinanced Debt immediately prior to such refinancing or (B) in the
case of any extensions, refinancings, refundings or renewals of the
Funded Debt and Current Debt under the Fleet Bank Agreement or any
Refinancing Debt thereof, the amount permitted under section
13.5(b);
(ii) the scheduled final maturity date of the Refinancing Debt
is not earlier than that of the Refinanced Debt;
(iii) the Weighted Average Life to Maturity of the Refinancing
Debt is not less than that of the Refinanced Debt;
(iv) the Refinancing Debt has a ranking which is not senior
(as a result of any contractual or structural subordination, the
grant of any collateral security therefor, any change in the Persons
obligated with respect thereto or otherwise) to the ranking of the
Refinanced Debt;
(v) the Refinancing Debt bears interest at market rates
prevailing at its date of issuance; and
(vi) both at the time of and immediately after giving effect
to the incurrence of the Refinancing Debt and the retirement of the
Refinanced Debt, no Default or Event of Default shall have occurred
and be continuing;
(f) Funded Debt and/or Current Debt owing to the Holding Company or
to any Wholly-Owned Subsidiary of the Holding Company; and
(g) Funded Debt and/or Current Debt owing to any former employee in
connection with a purchase of Shares of the Holding Company from such
former employee.
For purposes of this section 13.5, any Person becoming a Subsidiary of the
Holding Company after the date hereof shall be deemed, at the time it becomes a
Subsidiary, to have incurred all of its then outstanding Funded Debt and Current
Debt.
13.6. Certain Financial Covenants.
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(a) Consolidated Net Worth. On and as of the last day of each fiscal
quarter of the Holding Company, Consolidated Net Worth shall not be less
than an amount equal to 75% of the Consolidated Net Worth as of the
Closing Date, plus an aggregate amount equal to 75% of positive
Consolidated Net Income for the period commencing on the Closing Date to
and including such last day (but without reduction for any losses).
(b) Fixed Charges Coverage Ratio. On and as of the last day of each
fiscal quarter of the Holding Company during the periods referred to
below, the ratio of Consolidated Cash Flow for the period of four
consecutive fiscal quarters of the Holding Company then ended to
Consolidated Fixed Charges for such period shall not be less than the
applicable ratio specified below:
Period Ratio
------ -----
Closing Date to and including
June 30, 1999 2.00 to 1.00
From and after July 1, 1999
to and including December 31, 2001 2.50 to 1.00
From and after January 1, 2002 3.00 to 1.00
Notwithstanding any provision hereof to the contrary, the ratio specified
in this section 13.6(b) shall be tested initially as of the fiscal quarter
ending September 30, 1998 and Consolidated Cash Flow as of such date shall
be determined by annualizing the Consolidated Cash Flow for the six months
then ended. Consolidated Cash Flow for purposes of the ratio specified in
this section 13.6(b) as of December 31, 1998 shall be determined by
annualizing the Consolidated Cash Flow for the nine months then ended.
(c) Leverage Ratio. The Holding Company will not permit, on any date
during any period specified below, the ratio of Consolidated Total Debt
outstanding on such date to Consolidated Cash Flow for the period of four
consecutive fiscal quarters of the Company ending on, or most recently
ended prior to, such date, to exceed the applicable ratio specified below:
Period Ratio
------ -----
Closing Date to and including
June 30, 1999 5.50 to 1.00
From and after July 1, 1999
to and including December 31, 2001 5.00 to 1.00
From and after January 1, 2002
to and including December 31, 2002 4.00 to 1.00
From and after January 1, 2003 3.50 to 1.00
Notwithstanding any provision hereof to the contrary, the ratio specified
in this section 13.6(c) shall be tested initially as of the fiscal quarter
ending September 30, 1998
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and Consolidated Cash Flow as of such date shall be determined by
annualizing the Consolidated Cash Flow for the six months then ended.
Consolidated Cash Flow for purposes of the ratio specified in this section
13.6(c) as of December 31, 1998 shall be determined by annualizing the
Consolidated Cash Flow for the nine months then ended.
13.7. Limitation on Tax Consolidation. The Holding Company will not, and
will not permit any of its Subsidiaries to, become a party to a consolidated or
combined income tax return with any Person other than the Holding Company and
its Subsidiaries.
13.8. Limitation on Liens. The Holding Company will not, and will not
permit any of its Subsidiaries to, create or suffer to exist any Lien in respect
of any property of any character of the Holding Company or any of its
Subsidiaries (whether owned on the date hereof or hereafter acquired); provided
that there shall be excluded from the operation of this section 13.8:
(a) Liens securing Funded Debt and Current Debt, including amounts
due (contingently or otherwise) in respect of reimbursement obligations
under letters of credit, interest rate protection agreements or similar
instruments and all related reimbursement agreements, under the Fleet Bank
Agreement to the extent permitted under section 13.5(b) or any Refinancing
Debt incurred to refinance or refund the same to the extent permitted
under section 13.5(e);
(b) Liens (other than any Lien created by any Environmental Law or
by Section 4068 of ERISA), charges and encumbrances which (i) are incurred
in the ordinary course of business and which are incidental to the conduct
of the business of the Holding Company and its Subsidiaries and the
ownership of its and their property, (ii) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit, (iii)
do not in the aggregate materially detract from the value of the property
of the Holding Company or its Subsidiaries or materially impair the use
thereof in the operation of its or their business and (iv) do not (and
could not reasonably be expected to) materially adversely affect the
rights of the holders of the Notes;
(c) any Lien existing on the date hereof and referred to on Exhibit
5.9 attached hereto;
(d) any Lien securing Funded Debt and/or Current Debt under Capital
Leases or consisting of purchase money loans permitted under section
13.5(d), provided that (i) such Lien does not extend to or cover any
property other than that being leased or acquired and (ii) the aggregate
amount of Indebtedness secured thereby does not exceed the cost of such
property; and
(e) any Lien upon or in any property at the time such property is
acquired by the Holding Company or any of its Subsidiaries, including
property of any Person which is to be acquired by the Holding Company or
any of its Subsidiaries and thereafter becomes a Subsidiary of the Holding
Company; provided that (i) such Lien was not incurred in contemplation of
the acquisition of such property and does not and shall not extend to or
cover any other property of the Holding Company or any of its Subsidiaries
and (ii) the Funded Debt and Current Debt secured thereby is permitted
under section 13.5 and does not exceed the fair market value of such
property.
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13.9. Limitation on Transactions with Affiliates. The Holding Company will
not, and will not permit any of its Subsidiaries to, engage in any transaction
(including, without limitation, the purchase, sale or exchange of any properties
and assets or the rendering of any services or the payment of compensation) with
an Affiliate of the Holding Company or of any of its Subsidiaries on terms less
favorable to the Holding Company or any such Subsidiary in any material respect
than would be obtainable at the time in comparable transactions with a Person
not such an Affiliate.
13.10. Limitation on Investments. The Holding Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly, make or commit to
make any Investments other than Permitted Investments.
13.11. Limitation on Issuance of Shares of Subsidiaries. The Holding
Company will not permit any of its Subsidiaries to (a) issue, sell or otherwise
dispose of any Shares (or any securities convertible into or exercisable or
exchangeable for Shares) of such Subsidiary except to the Holding Company or to
a Wholly-Owned Subsidiary of the Holding Company or (b) sell, transfer or
otherwise dispose of any Shares (or any securities convertible into or
exercisable or exchangeable for Shares) of any other Subsidiary of the Holding
Company except to the Holding Company or to a Wholly-Owned Subsidiary of the
Holding Company. The Holding Company will not, in any event, permit any
Subsidiary of the Holding Company to have outstanding any Preferred Shares.
13.12. Limitation on Subsidiary's Consolidation or Merger. The Holding
Company will not permit any of its Subsidiaries to consummate any merger or
consolidation with any other Person, provided that any Wholly-Owned Subsidiary
of the Holding Company may be merged into the Holding Company or into another
Wholly-Owned Subsidiary of the Holding Company, if (a) the Holding Company or
such other Wholly-Owned Subsidiary is the surviving Person from such merger and
is Solvent (both at the time of and immediately after giving effect thereto),
(b) the Holding Company or such other Wholly-Owned Subsidiary shall have
delivered to each holder of a Security such opinions, confirmations and other
agreements and instruments as the Required Holders of each class of Securities
shall have reasonably requested and (c) both at the time of and immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing. No transaction permitted by this section 13.12
shall have the effect of releasing the Holding Company or any other party to any
of the Operative Documents from any liability or obligation under any of the
Operative Documents.
13.13. Limitation on the Holding Company's Consolidation or Merger. The
Holding Company will not consolidate with or merge into any other Person or
Transfer all or substantially all of its property in a single transaction or
series of transactions to any Person, provided that the foregoing restriction
does not apply to the consolidation or merger of the Holding Company with or
into, or the Transfer of all or substantially all of its property in a single
transaction or series of transactions to, any other Person so long as:
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires as a result of such Transfer all
or substantially all of the property of the Holding Company, as the case
may be (the "Successor Corporation"), shall be a Solvent corporation
organized and existing under the laws of and conducting a majority of its
business in the United States of America, any state thereof or the
District of Columbia and whose lines of business are related to or not
materially different from the Business;
94
(b) if the Holding Company is not the Successor Corporation, the
Successor Corporation shall have executed and delivered to each holder of
Notes its assumption of the due and punctual performance and observance of
each covenant and condition of this Agreement and each of the other
Operative Documents (pursuant to such agreements and instruments as shall
be reasonably satisfactory to the Required Holders of the Notes), and the
Holding Company shall have caused to be delivered to each holder of Notes
an opinion of counsel reasonably satisfactory to the Required Holders, to
the effect that all agreements or instruments effecting such assumption
are legal, valid and binding obligations of such Successor Corporation
enforceable against it in accordance with their respective terms and
covering such other matters as the Required Holders may reasonably
request; and
(c) immediately after giving effect to such transaction (i) no
Default or Event of Default shall have occurred and be continuing, (ii)
the Net Worth of the Successor Corporation shall not be less than the Net
Worth of the Holding Company immediately prior to such transaction and
(iii) the Holding Company or the Successor Corporation, as the case may
be, would be able to incur at least $1 of additional Funded Debt and/or
Current Debt under section 13.5.
No such transaction by the Holding Company shall have the effect of releasing
the Holding Company or any Successor Corporation that shall theretofore have
become such in the manner prescribed in this section 13.13 from its liability
under this Agreement or any of the other Operative Documents.
13.14. Limitation on Disposition of Property. The Holding Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
sell, lease or otherwise dispose of any of their respective properties and
assets (or any right, title or interest therein), whether owned on the date
hereof or hereafter acquired and whether real, personal or mixed, tangible or
intangible, including, without limitation, any Shares, securities or
Indebtedness of any Subsidiary of the Holding Company, except for (a) sales of
inventory and licenses of software or other Proprietary Rights in the ordinary
course of business, (b) dispositions of tangible personal property and assets
that have suffered casualties if the proceeds thereof (including insurance
proceeds) are reinvested in tangible personal properties and assets of
substantially similar value and utility and/or applied to the permanent
reduction of Superior Indebtedness, in each case within 180 days following the
receipt of such proceeds, (c) transactions permitted under section 13.13, and
(d) other sales of properties and assets if, in the case of this clause (d), on
the date of such sale and after giving effect thereto:
(i) no Default or Event of Default shall have occurred and be
continuing;
(ii) in the case of any sale of properties and assets having a
value of $1,000,000 or more, the board of directors of the Holding
Company shall have reasonably determined in good faith, as evidenced
by written resolutions thereof promptly delivered to the holders of
the Notes, that (A) the sale of such properties and assets is in the
best interests of the Holding Company and its Subsidiaries and is
not disadvantageous in any material respect to the holders of the
Notes and (B) such properties and assets are being disposed of for
fair and adequate consideration on fair and adequate terms; and
95
(iii) the aggregate value of all properties and assets sold
pursuant to this clause (e) during the period commencing on the
Closing Date and ended on the date of such sale is not more than 25%
of Consolidated Total Assets as at the end of the most recently
completed fiscal quarter of the Holding Company immediately prior to
the date of such sale; provided that, if the proceeds of a sale made
pursuant to this clause (d) (net of all costs and out-of-pocket
expenses in connection therewith) are applied within 180 days of the
consummation of such sale to (x) the purchase by the Holding Company
(or the Subsidiary effecting such sale) of other property and assets
used and useful in the ordinary course of business of the Holding
Company or such Subsidiary, (y) the prepayment (and permanent
reduction) of the Funded Debt under the Fleet Bank Agreement (or any
Refinancing Debt incurred to refinance or refund such Funded Debt)
or (z) the prepayment of the Notes pursuant to section 9.2, then,
from and after the date such net proceeds are so applied, such sale
shall be disregarded for purposes of any subsequent computation
under this clause (d).
For purposes of determining compliance with this section 13.14, the value of any
properties and assets (other than cash) to be sold by the Holding Company or any
of its Subsidiaries shall be deemed to be the fair market value thereof (as
reasonably determined by the board of directors of the Holding Company as of the
date of disposition thereof).
13.15. Limitation on Leasebacks. The Holding Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly, sell or otherwise
dispose of any of its property if, as part of the same transaction or series of
related transactions, any such Person shall then or thereafter rent or lease as
lessee, or similarly acquire the right to possession or use of, such property
(or a major portion thereof), or other property which it intends to use for
substantially the same purpose or purposes, under any lease, agreement or other
arrangement which obligates any such Person to pay rent as lessee or make any
other payments for such possession or use.
13.16. Modification of Certain Documents, Agreements and Instruments;
Fiscal Year. The Holding Company will not, and will not permit any of its
Subsidiaries to:
(a) file after the Closing any resolution of its board of directors
(or other governing body) with the Secretary of State of the jurisdiction
of its organization to establish or create a series of Preferred Shares
having terms which require the mandatory redemption of such Preferred
Shares on a date prior to the date of maturity of the Notes or a separate
class of equity securities;
(b) amend, modify, supplement or waive any term, condition or
provision of its Organizational Documents, the Option Plans or any of the
agreements, documents or instruments referred to in section 4.3 including,
without limitation, the Acquisition Documents (other than the Fleet Bank
Documents as to which the following section 13.16(c) applies), if the
effect thereof is, or could reasonably be expected to be, to impose
restrictions upon the Holding Company or any of its Subsidiaries that are
more restrictive in any material respect than those set forth in its
Organizational Documents or such other agreements, documents and
instruments as in effect on the Closing Date; or
(c) amend, supplement, modify or waive any term of the Fleet Bank
Documents (or the documents relating to any Refinancing Debt thereof) if
the effect
96
thereof is (i) to increase the aggregate outstanding principal amount of
the Indebtedness thereunder to an amount in excess of that permitted under
section 13.5(b), (ii) to make the scheduled final maturity date of the
Indebtedness thereunder earlier than that specified under the Fleet Bank
Agreement as in effect on the Closing Date (except that the working
capital loan facility thereunder may be renewed and extended on any number
of occasions), (iii) to make the Weighted Average Life to Maturity of the
Indebtedness thereunder less than that of the Indebtedness under the Fleet
Bank Agreement as in effect on the Closing Date, (iv) to make the ranking
of the Indebtedness thereunder senior (as a result of any contractual or
structural subordination, the grant of any collateral security therefor,
any change in the Persons obligated with respect thereto or otherwise) to
the ranking of the Indebtedness under the Fleet Bank Agreement as in
effect on the Closing Date, or (v) to make the interest rate(s) applicable
to the Indebtedness thereunder higher than the market rates prevailing at
the time of such amendment, supplement, modification or waiver.
13.17. Further Assurances.
(a) From time to time hereafter, the Holding Company will execute
and deliver, or will cause to be executed and delivered, such additional
agreements, documents and instruments and will take all such other actions
as any holder or holders of the Notes may reasonably request for the
purpose of implementing or effectuating the provisions of the Operative
Documents.
(b) Without limiting the generality of the foregoing, in the event
that the Holding Company at any time or from time to time shall organize
or acquire any direct or indirect Subsidiary, then and in each such case
the Holding Company will (i) promptly (but in any event not later than 20
days prior to consummating any such transaction) notify each holder of the
Notes and (ii) not later than the date upon which such transaction is
consummated cause such Subsidiary to execute and deliver to each holder of
any Notes a Note Guarantee.
13.18. Additional Subsidiaries. Notwithstanding anything to the contrary
set forth herein, without the prior written consent of the Required Holders of
the Notes (which consent shall not be unreasonably withheld or delayed), the
Holding Company shall not, and shall not permit any of its Subsidiaries to,
organize or acquire any Subsidiary (other than a Subsidiary organized or
acquired in connection with a Permitted Investment of the kind described in
clause (h) of the definition of the term "Permitted Investment").
13.19. Listing Status. The Holding Company shall use its best efforts to
assure that the Common Stock shall at all times be listed on the Nasdaq stock
exchange or another recognized national stock exchange in the United States.
14. Definitions.
14.1. Definitions of Capitalized Terms. The terms defined in this section
14.1, whenever used in this Agreement, shall, unless the context otherwise
requires, have the following respective meanings:
"Acquisition", "Acquisition Agreement" and "Acquisition Documents" shall
have the respective meanings specified in section 4.3.
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"Affiliate" of any Person shall mean any other Person which, directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with such first-mentioned Person; provided that in no
event shall you or any other institutional holder of Securities be deemed to be
an Affiliate of the Holding Company or any of its Subsidiaries. For the purposes
of this definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock or other Shares or by contract or
otherwise.
"Applicable Premium" shall have the meaning specified in section 9.2.
"Business" shall have the meaning specified in section 5.4.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day which shall be in Boston, Massachusetts, or New York, New York, a legal
holiday or a day on which banking institutions therein are authorized by law to
close.
"Capital Lease" shall mean any lease or similar arrangement which is of
such a nature that payment obligations of the lessee or obligor thereunder are
required to be capitalized and shown as liabilities upon a balance sheet of such
lessee or obligor prepared in accordance with GAAP or for which the amount of
the asset and liability thereunder as if so capitalized should be disclosed in a
note to such balance sheet.
"Capitalized Interest" shall have the meaning specified in the Notes.
"Cash Flow" of any Person shall mean, for any period, the Net Income of
such Person for such period after restoring thereto amounts deducted for (a)
Fixed Charges, (b) taxes in respect of income and profits, (c) depreciation and
amortization, and (d) non-cash stock issuance employee compensation expense,
determined in accordance with GAAP.
"Change of Control" shall mean an event or series of events (occurring for
whatever reason) following which:
(a) Xxxx X. Xxxxxx shall cease to serve as Chairman and Chief
Executive Officer of the Holding Company (in both title and function) for
any reason other than his death or permanent disability;
(b) Xxxx X. Xxxxxx shall cease to serve as Chairman and Chief
Executive Officer of the Holding Company (in both title and function) as a
result of his death or permanent disability and the Holding Company shall
have failed to engage an individual satisfactory to the Required Holders
of each class of Securities within six months after such event; or
(c) the Holding Company shall cease to own beneficially and control
100% of the outstanding Shares of each of TNC and UTC.
"Closing" and "Closing Date" shall have the respective meanings specified
in section 3.
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"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency from time to time administering the Securities Act and/or
the Exchange Act.
"Common Stock" shall mean the Common Stock, without par value, of the
Holding Company as constituted on the Closing Date and any Shares into which
such Common Stock shall have been changed or any Shares resulting from any
reclassification of such Common Stock.
"Confidential Information" shall have the meaning specified in section 8.
"Consolidated Cash Flow" [13.6], "Consolidated Fixed Charges" [13.6],
"Consolidated Interest Charges" [13.6], "Consolidated Net Income" [13.6],
"Consolidated Net Worth" [13.6],"Consolidated Total Debt" [13.6] and
"Consolidated Total Assets" [13.14] shall mean the Cash Flow, Fixed Charges,
Interest Charges, Net Income, Net Worth, Total Debt and Total Assets, as the
case may be, of the Holding Company and its Subsidiaries (whether or not
ordinarily consolidated in consolidated financial statements of the Holding
Company and its Subsidiaries), all consolidated in accordance with GAAP, and
after giving appropriate effect to outside minority interests, if any, in
Subsidiaries, provided that in determining Consolidated Cash Flow and
Consolidated Net Income there shall be excluded (a) the Net Income of any Person
(other than a Subsidiary of the Holding Company) in which the Holding Company or
any Subsidiary of the Holding Company has an ownership interest, except to the
extent that any such Net Income has been actually received by the Holding
Company or such Subsidiary in the form of cash dividends or similar cash
distributions, (b) any extraordinary gains and losses, (c) any equity interest
of the Holding Company or any of its Subsidiaries in the unremitted earnings of
any Person not a Subsidiary of the Holding Company or any of its Subsidiaries,
(d) any amounts representing the write-off of in-process research and
development expenses to be incurred in connection with the Acquisition, (e) the
one-time charges related to the Acquisition.
"Current Debt" of any Person shall mean, at any date, without duplication
of amounts, (a) all Indebtedness for borrowed money or in respect of Capital
Leases or the deferred purchase price of property (including, without
limitation, all Indebtedness of the kind referred to in clauses (b), (c), (d)
and (e) of the definition of Indebtedness but excluding trade payables and
employee wages arising in the ordinary course of business), whether or not
interest-bearing, and whether secured or unsecured, of such Person at such date
which would, in accordance with GAAP, be classified as short-term Indebtedness
at such date, but specifically excluding the current maturities of such Person's
Funded Debt, (b) all Guarantees by such Person at such date of Current Debt of
others and (c) the aggregate amount which is due on or before the expiration of
one year from such date in respect of any Redeemable Shares of such Person
(other than the Warrants and Warrant Shares).
"Current Market Price" of any security (including, without limitation, any
share of Common Stock) as of any date herein specified shall mean the average of
the daily closing prices for the 20 consecutive trading days immediately prior
to, but not including the day in question (or in the event that a security has
been traded for less than 20 days, each of the trading days prior to the day in
question on which such security has been traded). The closing price for each day
shall be (a) if such security is listed or admitted for trading on any domestic
national securities exchange, the closing sale price of such security, regular
way, or the average of the closing bid prices thereof if no such sale occurred,
in each case as officially reported on the
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principal securities exchange on which such security is listed, or (b) if not
reported as described in clause (a), the closing sale price of such security, or
the average of the closing bid prices thereof if no such sale occurred, in each
case as reported by the Nasdaq Stock Market, or any similar system of automated
dissemination of quotations of securities prices then in common use, if so
quoted, as reported by any member firm of the New York Stock Exchange selected
by the Company, or (c) if not quoted as described in clause (b), the average of
the closing bid and asked prices for such security as reported by the National
Quotation Bureau Incorporated or any similar successor organization, as reported
by any member firm of the New York Stock Exchange selected by the Company.
"Default" shall mean any condition or event which constitutes or, after
notice or lapse of time or both, would constitute an Event of Default.
"Disclosure Documents" shall have the meaning specified in section 5.4.
"Environmental Laws" shall mean any law, statute, rule, regulation or
other governmental standard or requirement relating or pertaining to (a) the
generation, manufacture, management, handling, use, sale, transportation,
treatment, storage, disposal, delivery, discharge, release or emission of any
waste, pollutant or toxic, hazardous or other similar substance (including,
without limitation, petroleum and petroleum-derived materials), or (b) any other
act, omission or condition affecting or involving pollution or contamination of
the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and rulings thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) that, together with the Holding Company, would be treated as a
single employer under section 4001(b) of ERISA, or that is a member of a group
of which the Holding Company is a member and that is a controlled group within
the meaning of section 4971(e)(2)(B) of the Code.
"Event of Default" shall have the meaning specified in section 15.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
"Fair Value" shall mean the fair value of the appropriate security,
property, asset, business or entity as determined by the board of directors of
the Holding Company, provided that if, within 15 days following receipt of the
writing setting forth any such determination of Fair Value by the board of
directors of the Holding Company, the Required Holders of the Warrants (for
purposes of any determination of Fair Value pursuant to section 4 of the
Warrants) shall notify the Holding Company of their disagreement with such
determination, then Fair Value shall be determined by an independent appraiser
of recognized national standing (selected by the Holding Company and reasonably
satisfactory to the Required Holders of the Warrants. Each determination of Fair
Value shall be made in accordance with generally accepted financial practice
(but without any adjustment on account of any lack of liquidity, lack of control
and/or restriction on transferability of any securities) and shall be set forth
in writing, and the Holding Company shall, immediately following such
determination, deliver a copy thereof to each holder or holders of the
Securities then outstanding. For purposes of any determination of Fair Value
pursuant to section 4 of the Warrants, Fair Value shall be calculated on a basis
which assumes
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(x) the exercise of the Warrants and the receipt of the consideration payable
upon such exercise and (y) the issuance of all Common Stock permitted to be
issued pursuant to the Option Plans and the receipt of the consideration payable
upon such issuance. The determination of any such independent appraiser so made
shall be conclusive and binding on the Holding Company and on all holder or
holders of the applicable class of Securities. The Holding Company shall pay all
of the expenses incurred in connection with any such determination, including,
without limitation, the expenses of the independent appraiser engaged to make
such determination. If the Holding Company shall not have engaged such appraiser
within 20 days after the occurrence of the event giving rise to the need
therefor, then such appraiser may be engaged by the Required Holders of the
Warrants (for purposes of any determination of Fair Value pursuant to section 4
of the Warrants). Notwithstanding the foregoing, in the case of any security, if
clauses (a), (b) or (c) of the definition of Current Market Price are applicable
to such security, then the Fair Value of such security shall be the Current
Market Price of such security.
"Fixed Charges" of any Person shall mean, for any period, the sum (without
duplication of amounts) of all Interest Charges and all Rental Obligations of
such Person for such period, determined in accordance with GAAP.
"Fleet Bank Agreement" shall mean the Credit Agreement dated as of April
17, 1998 among the Holding Company, TNC, UTC and Progressive, acting as joint
and several obligors, and Fleet National Bank, and an interest rate protection
agreement, as the same may be from time to time amended, restated or otherwise
modified in accordance with provisions of section 13.16(c).
"Fleet Bank Documents" shall mean the Fleet Bank Agreement and the other
agreements, documents and instruments related thereto.
"Funded Debt" of any Person shall mean, at any date, without duplication
of amounts, (a) all Indebtedness for borrowed money or in respect of Capital
Leases or the deferred purchase price of property (including, without
limitation, all Indebtedness of the kind referred to in clauses (b), (c), (d)
and (e) of the definition of Indebtedness), whether or not interest-bearing, of
such Person which would, in accordance with GAAP, be classified as long-term
Indebtedness at such date, but in any event including all such Indebtedness,
whether secured or unsecured, of such Person which matures (or which, pursuant
to the terms of a revolving credit agreement or otherwise, is directly or
indirectly renewable or extendible at the option of such Person for a period
ending) more than one year after the date of the creation thereof,
notwithstanding the fact that payments in respect thereof (whether installment,
serial maturity or sinking fund payments or otherwise) are required to be made
by such Person not more than one year after the date as of which the amount of
Funded Debt is being determined, other than any amount thereof which is at the
time included in Current Debt of such Person, (b) all Guarantees by such Person
at such date of Funded Debt of others and (c) the aggregate amount which is due
more than one year from such date in respect of any Redeemable Shares of such
Person (other than the Warrants and Warrant Shares). For all purposes under this
Agreement, the Indebtedness incurred in respect of the interest rate protection
agreement provided under the Fleet Bank Agreement shall constitute Funded Debt
of the Holding Company, TNC, UTC and Progressive.
"GAAP" shall mean generally accepted accounting principles as in effect in
the United States from time to time, consistently applied.
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"Guarantee" of any Person shall mean, at any date, any obligation of such
Person at such date guaranteeing, directly or indirectly, any Indebtedness,
liability or other obligation of any other Person in any manner, but in any
event including all endorsements (other than for collection or deposit in the
ordinary course of business), all discounts with recourse and all obligations
incurred through an agreement, contingent or otherwise (a) to purchase the
obligations of any other Person or any security therefor or to advance or supply
funds for the payment or purchase of such obligations, or (b) to purchase, sell
or lease (as lessee or lessor) property, products, materials or supplies or to
purchase or sell transportation or services, primarily for the purpose of
enabling the obligor to make payment of such obligations or to assure the owner
of such obligations against loss, regardless of the delivery or non-delivery of
the property, products, materials or supplies or the furnishing or nonfurnishing
of the transportation or services, or (c) to provide funds for the payment of,
or obligating such Person to make, any loan, advance, capital contribution or
other investment in the obligor for the purpose of assuring a minimum equity,
asset base, working capital or other balance sheet condition for any date or to
provide funds for the payment of any obligation, dividend or stock liquidation
payment, or otherwise to supply funds to or in any manner invest in the obligor.
The amount of any Guarantee shall be equal to the amount of all Indebtedness,
liabilities and other obligations directly or indirectly guaranteed thereby.
"Holding Company" shall have the meaning specified at the beginning of
this Agreement.
"Indebtedness" of any Person shall mean, at any date, all indebtedness,
liabilities and other obligations of such Person at such date (other than items
of stockholders' equity) which would, in accordance with GAAP, be classified as
liabilities of such Person, but in any event including (without duplication):
(a) all Guarantees of such Person;
(b) all indebtedness, liabilities and other obligations secured by
any Lien on any property owned by such Person, whether or not such Person
has assumed or become liable for the payment of such obligations;
(c) all indebtedness, liabilities and other obligations of such
Person arising under any conditional sale or other title retention
agreement, whether or not the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession
or sale of such property;
(d) the amount of the obligation required to be recorded by the
lessee in respect of any Capital Lease under which such Person is lessee;
and
(e) all indebtedness, liabilities and other obligations arising in
connection with letters of credit, bankers acceptances or other credit
enhancement facilities and Swaps;
provided that, in the case of any Indebtedness of the kind referred to in
clauses (b) and (c) of this definition, if such Indebtedness is "nonrecourse" to
such Person (that is, such Person has no liability in respect thereof other than
to return the property securing such Indebtedness or the property subject to the
conditional sale or other title retention agreement), then, for purposes hereof,
the amount of such Indebtedness at such date shall be equal to the fair market
value of such property.
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"Indemnified Costs" and "Indemnitee" shall have the respective meanings
specified in section 20.
"Interest Charges" of any Person shall mean, for any period, the
aggregate amount of all cash interest paid, payable or guaranteed during such
period by such Person in respect of Funded Debt and Current Debt, including,
without limitation, the "imputed interest" portion of Rental Obligations on
Capital Leases and all interest capitalized and/or deferred during such period
on any Funded Debt and Current Debt, determined in accordance with GAAP.
"Investment" of any Person shall mean any investment made by such Person
in any other Person by stock purchase, capital contribution, loan, advance,
acquisition of Indebtedness, Guarantee or otherwise.
"Issuer" or Issuers" shall have the respective meanings specified at the
beginning of this Agreement.
"Licenses" shall mean certificates of public convenience and necessity,
franchises, licenses and other permits and authorizations from governmental
authorities.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, lien (statutory or otherwise), preference, priority, security
interest, chattel mortgage or other charge or encumbrance of any kind, or any
other type of preferential arrangement, including, without limitation, the lien
or retained security title of a conditional vendor and any easement, right of
way or other encumbrance on title to real property and any lease having
substantially the same effect as any of the foregoing.
"Make Whole Amount" shall mean, at any date, with respect to any
prepayment or payment (whether on account of acceleration or otherwise) of any
Notes, if the Treasury Rate plus 100 basis points at such date is lower than 19%
per annum (prior to the Warrant Exchange ) or 12% per annum (after the Warrant
Exchange), the excess of (x) the present value of the principal and interest
payments on and in respect of the Notes being prepaid or paid, as the case may
be, that would otherwise become due and payable (without giving effect to such
prepayment or payment) (including the final payment on the maturity date of the
Notes), discounted at a rate which is equal to the Treasury Rate plus 100 basis
points over (y) the principal amount of the Notes being prepaid or paid, as the
case may be, at par. If the Treasury Rate plus 100 basis points at the date of
such prepayment or payment is equal to or higher than 19% per annum (prior to
the Warrant Exchange ) or 12% per annum (after the Warrant Exchange), the Make
Whole Amount is zero.
"Material Adverse Change" shall mean a material adverse change in or
effect upon (a) the condition (financial or otherwise), business, performance,
operations, properties, profits or prospects of the Holding Company and its
Subsidiaries taken as a whole, (b) the legality, validity or enforceability of
this Agreement, the Securities or any of the other Operative Documents; (c) the
rights and remedies of any holder of Securities with respect thereto or (d) the
ability of the Holding Company or any of its Subsidiaries to perform their
obligations under any of the Operative Documents and/or to comply with any of
the terms thereof applicable to it. The parties agree that if the maximum
aggregate amount of all losses, damages, expenses and liabilities attributable
to any breach of a representation made by the Holding Company herein or in any
of the other Operative Documents is and shall be not more than $1,000,000, the
same shall not constitute a Material Adverse Change.
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"Multiemployer Plan" shall mean any Plan that is a "multiemployer plan" as
defined in section 4001(a)(3) of ERISA.
"Net Income" of any Person shall mean, for any period, the net income (or
net loss) of such Person for such period, determined in accordance with GAAP.
"Net Worth" of any Person shall mean, at any date, (a) the total assets of
such Person which would be shown as assets on a balance sheet of such Person at
such date prepared in accordance with GAAP minus (b) the total liabilities of
such Person which would be shown as liabilities on a balance sheet of such
Person at such date prepared in accordance with GAAP.
"Note Guarantees" shall have the meaning specified in section 1.
"Notes" shall have the meaning specified in section 1.
"Obligor" shall have the meaning specified at the beginning of this
Agreement and in section 4.13.
"Officer's Certificate" shall mean a certificate signed on behalf of the
Holding Company by its Chairman, its President, its Chief Financial Officer or
one of its Senior Vice Presidents.
"Operative Documents" shall mean this Agreement, the Other Securities
Purchase Agreements, the Securities, the Note Guarantees, and each of the other
agreements, documents and instruments executed in connection herewith and
therewith, each as it may from time to time be amended, modified or
supplemented.
"Option Plans" shall have the meaning specified in section 11.
"Organizational Documents" of any Person shall mean such Person's charter
and by-laws, partnership agreement, operating agreement, members agreement,
trust agreement, as applicable, and/or any other similar agreement, document or
instrument.
"Other Securities Purchase Agreements" and "Other Purchasers" shall have
the respective meanings specified in section 1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Investment" shall mean any of the following Investments:
(a) Investments, if any, existing on the date hereof and referred to
in Exhibit 5.9 attached hereto;
(b) Investments by the Holding Company or by any of its Subsidiaries
in any Wholly-Owned Subsidiary of the Holding Company (or in any Person
which simultaneously therewith becomes a Wholly-Owned Subsidiary of the
Holding Company) made by stock purchase, capital contribution, loan or
advance, provided that (i) both at the time of and immediately after
giving effect to any such Investment, no Default or Event of Default shall
have occurred and be continuing and (ii) all such
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Investments are made only in Solvent entities (A) which are organized
under the laws of and conduct substantially all of their respective
businesses in the United States of America (or a state thereof or the
District of Columbia) and (B) whose lines of business are related to or
not materially different from the Business;
(c) readily marketable obligations (having a maturity not in excess
of 12 months from the date of acquisition thereof) of, or fully and
unconditionally guaranteed (as to both principal and interest) by, the
United States of America or an agency thereof;
(d) negotiable certificates of deposit (having a maturity not in
excess of 12 months from the date of acquisition thereof) evidencing
direct obligations of any federally insured commercial bank or trust
company organized and operating in the United States of America having
capital and surplus and undivided profits of at least $100,000,000 and
having the highest or second highest rating available from Xxxxx'x
Investors Service, Inc., Standard & Poor's Corporation or Fitch Investors
Service;
(e) Shares of so-called "money market funds" registered under the
Investment Company Act of 1940, as amended, organized and operating in the
United States of America, having total net assets of $1,000,000,000 or
more and investing primarily in securities of the character described in
the preceding clauses (c) and (d) of this definition;
(f) Investments in Repurchase Agreements;
(g) accounts receivable arising from transactions in the ordinary
course of business; contingent liabilities represented by endorsements of
negotiable instruments for collection or deposit in the ordinary course of
business; advances (including advances to employees), deposits, down
payments and prepayments on account of firm purchase orders, in each case
made in the ordinary course of business; and
(h) Investments made after the date hereof not otherwise permitted
by the preceding clauses (a) through (g) of this definition, provided that
both at the time of and immediately after giving effect to any such
Investment (i) no Default or Event of Default shall have occurred and be
continuing and (ii) the Holding Company would be able to incur at least $1
of additional Funded Debt and/or Current Debt under section 13.5, and
(iii) the aggregate amount of Investments made pursuant to this clause (h)
shall not exceed $1,500,000 at any time.
"Person" shall mean an individual, a corporation, a limited liability
company, an association, a joint-stock company, a business trust or other
similar organization, a partnership, a joint venture, a trust, an unincorporated
organization or a government or any agency, instrumentality or political
subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Holding Company or any ERISA
Affiliate or with respect to which the Holding Company or any ERISA Affiliate
may have any liability.
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"Preferred Shares", as applied to any Person, shall mean Shares of such
Person which shall be entitled to preference or priority over any other Shares
of such Person in respect of either the payment of dividends or the distribution
of assets upon liquidation.
"Progressive" shall have the meaning specified in section 4.3.
"Proprietary Rights" shall mean any patents, registered and common law
trademarks, service marks, trade names, copyrights, licenses and other similar
rights (including, without limitation, know-how, trade secrets and other
confidential information) and applications for each of the foregoing, if any.
"Purchased Common Shares" shall have the meaning specified in section 1.
"Redeemable" shall mean, with respect to any Shares of any Person, each
Share of such Person that is (a) redeemable, payable or required to be purchased
or otherwise retired or extinguished, or convertible into Funded Debt or Current
Debt of such Person, (i) at a fixed or determinable date, whether by operation
of any sinking fund or otherwise, (ii) at the option of any Person other than
such Person or (iii) upon the occurrence of a condition not solely within the
control of such Person or (b) convertible into other Redeemable Shares.
"Refinanced Debt" shall have the meaning specified in section 13.5.
"Refinancing Debt" shall have the meaning specified in section 13.5.
"Registrable Shares" shall mean any Warrant Shares, except that, as to any
particular Registrable Shares, such securities, once issued, will cease to be
Registrable Shares when (a) a registration statement covering such securities
has been declared effective and such securities have been disposed of pursuant
to an effective registration statement or (b) such securities are sold to the
public in accordance with Rule 144 (or any similar provision then in force)
under the Securities Act. A Person shall be deemed a "holder" of Registrable
Shares for purposes of section 12 if such Person is the holder of any Warrants
or any Warrant Shares issued upon exercise of any Warrant.
"Registration Expenses" shall mean all fees, expenses and disbursements
related to any registration, qualification or compliance pursuant to section 12,
including, without limitation, all registration, filing, rating and listing
fees, blue sky fees and expenses, printing expenses, fees and disbursements of
counsel (including, without limitation, the fees, expenses and disbursements of
counsel for the holder or holders of the Registrable Shares), and expenses of
any special audits incident to or required by any registration, qualification or
compliance, except that Registration Expenses shall not include any
underwriters' discounts or commissions attributable to any Registrable Shares
registered and sold pursuant to any such registration.
"Rental Obligations" of any Person shall mean, for any period, all rents
and other amounts (including as such, all payments which such Person is
obligated to make to the lessor on termination of any lease and/or on surrender
of the leased property other than payments for which such Person is contingently
liable on account of early termination or breach of such lease) paid, payable or
guaranteed during such period by such Person, as lessee or sublessee under any
lease, excluding any amount required to be paid by such Person (whether or not
designated as rents or additional rents) on account of maintenance, repairs,
insurance, taxes, utilities and similar charges, determined in accordance with
GAAP. Whenever it is necessary to determine
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the amount of Rental Obligations for any period, to the extent that such Rental
Obligations are not definitely determinable by the terms of the lease, the
Rental Obligations not so definitely determinable shall be estimated in good
faith and in such reasonable manner as the board of directors of the Holding
Company may determine.
"Repurchase Agreement" shall mean any written agreement (a) that provides
for (i) the transfer of one or more United States Governmental Securities (as
defined below) in an aggregate principal amount at least equal to the amount of
the Transfer Price (as defined below) to the Holding Company or any of its
Subsidiaries from an Acceptable Bank (as defined below) or an Acceptable
Broker-Dealer (as defined below) against a transfer of funds (the "Transfer
Price") by the Holding Company or such Subsidiary to such Acceptable Bank or
Acceptable Broker-Dealer, and (ii) a simultaneous agreement by the Holding
Company or such Subsidiary, in connection with such transfer of funds, to
transfer to such Acceptable Bank or Acceptable Broker-Dealer the same or
substantially similar United States Governmental Securities for a price not less
than the Transfer Price plus a reasonable return thereon at a date certain not
later than 365 days after such transfer of funds; (b) in respect of which the
Holding Company or such Subsidiary shall have the right, whether by contract or
pursuant to applicable law, to liquidate such agreement upon the occurrence of
any default thereunder; and (c) in connection with which the Holding Company or
such Subsidiary, or an agent thereof, shall have taken all action required by
applicable law or regulations to perfect a Lien in such United States
Governmental Securities. For purposes of this definition, (x) the term
"Acceptable Bank" shall mean any bank or trust company of the sort described in
clause (d) of the definition of Permitted Investments; (y) the term "Acceptable
Broker-Dealer" shall mean any Person other than a natural person (i) which is
registered as a broker or dealer pursuant to the Exchange Act and (ii) whose
long-term unsecured debt obligations shall have been given the highest or second
highest rating available from Standard & Poor's Corporation, Xxxxx'x Investors
Service, Inc. or any other credit rating agency of recognized national standing;
and (z) "United States Governmental Securities" shall mean securities of the
kind referred to in clause (c) of the definition of Permitted Investment.
"Required Holders" as applied to describe the requisite holder or holders
of any class of the Securities, shall mean, at any date, the holder or holders
of a majority or more in interest of such class of Securities at the time
outstanding (excluding all Securities at the time owned by the Holding Company
or any Affiliate of the Holding Company).
"Securities" shall have the meaning specified in section 1.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Seller" shall have the meaning specified in section 4.3.
"Shares" of any Person shall include any and all Shares of capital stock,
partnership interests, limited liability company interests, membership
interests, or other Shares, interests, participations or other equivalents
(however designated and of any class) in the capital of, or other ownership
interests in, such Person, and, as applied to the Holding Company, includes the
Common Stock.
"Solvent" as applied to any Person at any date shall mean that on and as
of such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities,
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including, without limitation, contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature and (d) such Person
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities on and as of
any date shall be computed as the amount that, in the light of all the facts and
circumstances existing on and as of such date, represents the amount that can
reasonably be expected to become an actual or matured liability. For purposes of
this definition, "Person" shall mean, where so required by the context in which
the term "Solvent" appears, such Person and its Subsidiaries taken as a whole.
"Source" shall have the meaning specified in section 25.
"Subsidiary" of any Person at any date shall mean (a) any other Person a
majority (by number of votes) of the Voting Stock of which is owned by such
first-mentioned Person and/or by one or more other Subsidiaries of such
first-mentioned Person, (b) any Person of which the first-mentioned Person or
any of its other Subsidiaries is a general partner and (c) any other Person with
respect to which such first-mentioned Person and/or any one or more other
Subsidiaries of such first-mentioned Person (i) is entitled to more than 50% of
such Person's profits or losses or more than 50% of such Person's assets on
liquidation or (ii) holds an equity interest in such Person of more than 50%. As
used herein, unless the context clearly required otherwise, the term
"Subsidiary" refers to a Subsidiary of the Holding Company.
"Successor Corporation" shall have the meaning specified in section 13.13.
"Superior Indebtedness" shall have the meaning specified in the Notes.
"Swaps" shall mean, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"TNC" shall have the meaning specified at the beginning of this Agreement.
"Total Assets" of any Person shall mean, at any date, the depreciated book
value of all properties and assets of such Person (whether real, personal or
mixed, tangible or intangible) at such date, determined in accordance with GAAP.
"Total Debt" of any Person shall mean, at any date, all Funded Debt and
Current Debt of such Person at such date, determined in accordance with GAAP.
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"Transfer" shall mean, with respect to any Person, any transaction in
which such Person sells, conveys, transfers or leases (as lessor) any of its
property or assets, including, without limitation, the capital stock of any
Subsidiary.
"Treasury Rate" at any time with respect to any Notes being prepaid or
paid (whether on account of acceleration or otherwise), as the case may be,
shall mean and shall be determined by reference to the applicable display on the
Bloomberg Financial Markets Service as of 10:00 A.M., Boston time, on the second
business Day prior to the date fixed for such prepayment or payment (or, if such
display is no longer available, any publicly available source of similar market
data as selected by the Required Holders of the Notes and reasonably acceptable
to the Company), and shall be the yield on actively traded United States
Treasury securities adjusted to a maturity equal to the then remaining Weighted
Average Life to Maturity of the Notes then being prepaid or paid (whether on
account of acceleration or otherwise) (the "Remaining Life"). If the Remaining
Life is not equal to the maturity of a United States Treasury security for which
a yield is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of the two closest United States Treasury securities for which such yields are
given, except that if the Remaining Life is less than one year, the average
yield on actively-traded United States Treasury securities adjusted to a
constant maturity of one year shall be used. The Treasury Rate shall be computed
to the fifth decimal place (one-thousandth of a percentage point) and then
rounded to the fourth decimal place (one-hundredth of a percentage point).
"UTC" shall have the meaning specified at the beginning of this Agreement.
"Voting Stock", when used with reference to any Person, shall mean Shares
(however designated) of such Person having ordinary voting power for the
election of a majority of the members of the board of directors (or other
governing board) of such Person, other than Shares having such power only by
reason of the happening of a contingency.
"Warrant Exchange" shall have the meaning specified in section 1.
"Warrant Shares" shall have the meaning specified in the Warrants.
"Warrants" shall have the meaning specified in section 1.
"Weighted Average Life to Maturity" of any Indebtedness or obligation
shall mean, at any date, the number of years obtained by dividing the then
Remaining Dollar-years of such Indebtedness or obligation by the then
outstanding principal amount of such Indebtedness or obligation. For purposes of
this definition, the "Remaining Dollar-years" of any Indebtedness or obligation
shall mean, at any date, the total of the products obtained by multiplying (a)
the amount of each then remaining installment, sinking fund, serial maturity or
other required payment, including payment at final maturity, in respect thereof,
by (b) the number of years (calculated to the nearest one-twelfth) which will
elapse between such date and the making of such payment.
"Wholly-Owned Subsidiary" of any Person at any date shall mean any
Subsidiary of such Person at such date all of the outstanding Shares of which,
other than directors' qualifying Shares and the like, shall at the time be owned
by such Person and/or by one or more other Wholly-Owned Subsidiaries of such
Person and the accounts of which are consolidated with those of such Person in
accordance with GAAP.
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"Withdrawal Liability" shall have the meaning given such term under Part 1
of Subtitle E of Title IV of ERISA.
14.2. Other Definitions. The terms defined in this section 14.2, whenever
used in this Agreement, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified.
"this Agreement" (and similar references to any of the other Operative
Documents) shall mean, and the words "herein" (and "therein"), "hereof" (and
"thereof"), "hereunder" (and "thereunder") and words of similar import shall
refer to, such instruments as they may from time to time be amended, modified or
supplemented.
"beneficial" ownership of any Shares or other securities by any Person
shall be determined in the manner set forth in Rule 13d-3 of the Commission
under the Exchange Act.
a "class" of Securities shall refer to the Notes, the Warrants or the
Warrant Shares, as the case may be, each of which is a separate class.
"corporation" shall include an association, joint stock company, business
trust or other similar organization.
"premium" when used in conjunction with references to principal of and
interest on the Notes, shall mean any amount due upon any payment or prepayment
of any of the Notes, other than principal and interest, and shall include the
Make Whole Amount or Applicable Premium, as the case may be.
"qualification" or "compliance" shall mean the qualification or compliance
of all Registrable Shares included in any registration pursuant to section 12
under all applicable blue sky or other state securities laws.
"register", "registered" and "registration" as used in section 12 refer to
a registration effected by filing a registration statement in compliance with
the Securities Act to permit the sale and disposition of the Registrable Shares
and any amendment filed or required to be filed to permit any such disposition.
14.3. Accounting Terms and Principles; Laws.
(a) All accounting terms used herein which are not expressly defined
in this Agreement shall have the respective meanings given to them in
accordance with GAAP; all computations made pursuant to this Agreement
shall be made in accordance with GAAP and all financial statements shall
be prepared in accordance with GAAP. If there shall occur any change in
accounting principles from GAAP as in effect on the Closing Date, then the
Holding Company and the Required Holders of the Notes shall make
adjustments to such financial covenants as are determined in good faith to
be appropriate to reflect such changes so that the criteria for evaluating
the financial condition and operations of the Holding Company and its
Subsidiaries shall be the same after such changes as if such changes had
not been made.
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(b) All references herein to laws, statutes, rules, regulations
and/or to other governmental restrictions, standards and/or requirements
shall, unless the context clearly requires otherwise, be deemed to refer
to those promulgated, issued and/or enforced by any domestic or foreign
federal, state or local government, governmental agency, authority, court,
instrumentality or regulatory body, including, without limitation, those
of the United States of America or any state thereof or the District of
Columbia.
15. Remedies.
15.1. Events of Default Defined; Acceleration of Maturity. If any one or
more of the following events ("Events of Default") shall occur (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that is to say:
(a) if default shall be made in the due and punctual payment of all
or any part of the principal of, or premium (if any) on, any Note when and
as the same shall become due and payable, whether at the stated maturity
thereof, by notice of or demand for prepayment, or otherwise;
(b) if default shall be made in the due and punctual payment of any
interest on any Note or any fee when and as the same shall become due and
payable and such default shall have continued for a period of three
Business Days;
(c) if default shall be made in the performance or observance of any
covenant, agreement or condition contained in sections 7(g), 8(a), 8(b),
9.6, 13.2(b), 13.5 to 13.7, inclusive, or 13.9 to 13.19, inclusive;
(d) if default shall be made in the performance or observance of any
other of the covenants, agreements or conditions contained in this
Agreement or any of the other Operative Documents and such default shall
have continued for a period of 30 days after the earlier to occur of (i)
the Holding Company's obtaining actual knowledge of such default or (ii)
the Holding Company's receipt of written notice of such default;
(e) if the Holding Company or any Subsidiary of the Holding Company
shall make a general assignment for the benefit of creditors, or shall
generally not pay its debts as they become due, or shall admit in writing
its inability to pay its debts as they become due, or shall file a
voluntary petition in bankruptcy, or shall be adjudicated bankrupt or
insolvent, or shall file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, or shall file any answer admitting or not contesting the
material allegations of a petition filed against it in any such
proceeding, or shall seek or consent to or acquiesce in the appointment of
any trustee, custodian, receiver, liquidator or fiscal agent for it or for
all or any substantial part of its properties, or shall (or its directors
or stockholders shall) take any action looking to its dissolution or
liquidation;
(f) if, within 60 days after the commencement of an action against
the Holding Company or any Subsidiary of the Holding Company seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or
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similar relief under any present or future statute, law or regulation,
such action shall not have been dismissed or all orders or proceedings
thereunder affecting the operations or the business of the Holding Company
or any Subsidiary of the Holding Company stayed, or if the stay of any
such order or proceeding shall thereafter be set aside, or if, within 60
days after the appointment without the consent or acquiescence of the
Holding Company or any Subsidiary of the Holding Company of any trustee,
custodian, receiver, liquidator or fiscal agent for the Holding Company or
any Subsidiary of the Holding Company or for all or any substantial part
of their respective properties, such appointment shall not have been
vacated;
(g) if, under the provisions of any law for the relief or aid of
debtors, any court or governmental agency of competent jurisdiction shall
assume custody or control of the Holding Company or of any Subsidiary of
the Holding Company or of all or any substantial part of their respective
properties and such custody or control shall not be terminated or stayed
within 60 days from the date of assumption of such custody or control;
(h) if the Holding Company or any Subsidiary of the Holding Company
shall fail to (i) make any payment due on any Indebtedness (other than the
Notes) or other obligation (including any in respect of any performance
bond, bid bond or lease or any Shares upon the exercise by any Person of
any put or call option or other similar right of redemption or repurchase
with regard to such Shares), if the aggregate outstanding amount thereof
(and of any other Indebtedness or other obligation as to which the Holding
Company or any Subsidiary of the Holding Company is in default) exceeds
$3,000,000 (or the equivalent thereof, as of any date of determination, in
any other currency), or (ii) perform, observe or discharge any covenant,
condition or obligation in any agreement, document or instrument
evidencing, securing or relating to such Indebtedness or other obligation,
if the effect of any such failure of the character described in this
clause (h) is to cause, or any other Person shall cause, any payment in
respect thereof in an aggregate amount of $3,000,000 (or the equivalent
thereof, as of any date of determination, in any other currency) or more
to become due and payable;
(i) if a final judgment or judgments for the payment of money which,
together with all other outstanding final judgments for the payment of
money against the Holding Company and/or any Subsidiary of the Holding
Company (excluding any judgment or judgments as to which a financially
sound and reputable insurance company (having the highest or second
highest rating available from A.M. Best Holding Company or an equivalent
Person) has accepted full liability in writing), exceeds an aggregate of
$1,000,000 (or the equivalent thereof, as of any date of determination, in
any other currency) shall be rendered against the Holding Company or any
Subsidiary of the Holding Company which judgments are not, within 60 days
after entry thereof, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay;
(j) if any representation or warranty made by or on behalf of the
Holding Company or any Subsidiary of the Holding Company in this Agreement
or in any of the other Operative Documents or in any agreement, document
or instrument delivered under or pursuant to any provision hereof or
thereof shall prove to have been false or incorrect in any material
respect on the date as of which made;
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(k) if, at any time, this Agreement or any of the other Operative
Documents shall for any reason (other than the scheduled termination
thereof in accordance with its terms) expire, fail to be in full force and
effect or be disaffirmed, repudiated, cancelled, terminated or declared to
be unenforceable, null and void; or
(l) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under section
4042 of ERISA to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Holding Company or any ERISA Affiliate
that a Plan may become a subject of any such proceedings, (iii) the
aggregate "amount of unfunded benefit liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in accordance
with Title IV of ERISA, shall exceed $500,000 (or the equivalent thereof,
as of any date of determination, in any other currency), (iv) the Holding
Company or any ERISA Affiliate shall have incurred or is reasonably
expected to incur any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit
plans, (v) the Holding Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) the Holding Company or any Subsidiary of the
Holding Company establishes or amends any employee welfare benefit plan
that provides post-employment welfare benefits in a manner that would
increase the liability of the Holding Company or any Subsidiary of the
Holding Company thereunder; and any such event or events described in
clauses (i) through (vi) above, either individually or together with any
other such event or events, has resulted in, or could reasonably be
expected to result in, a liability in excess of $1,000,000;
then, upon the occurrence and during the continuance of any Event of Default
(other than one of the character described in clauses (e), (f) or (g) of this
section 15.1) and at the option of the holder or holders of 66-2/3% or more in
aggregate principal amount of the Notes at the time outstanding (excluding any
Notes at the time owned by the Holding Company or any Affiliate of the Holding
Company), exercised by written notice to the Obligor, the principal of all Notes
shall forthwith become due and payable, together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Obligor shall forthwith upon any such
acceleration pay to the holder or holders of all the Notes then outstanding (i)
the entire principal of and interest accrued on the Notes and (ii) in addition,
to the extent permitted by applicable law, an amount equal to the Make Whole
Amount or the Applicable Premium, as applicable, as liquidated damages and not
as a penalty; provided that, in the case of an Event of Default of the character
described in clauses (a) or (b) of this section 15.1 and irrespective of whether
all of the Notes have been declared due and payable by the holder or holders of
66-2/3% or more in aggregate principal amount of the Notes at the time
outstanding, any holder of Notes who or which has not consented to any waiver
with respect to such Event of Default may, at the option of such holder, by
written notice to the Obligor, declare all Notes then held by such holder to be,
and such Notes shall thereupon become, forthwith due and payable, together with
interest accrued thereon, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived, and the Obligor shall
forthwith upon any such acceleration pay to such holder (i) the entire principal
of and interest accrued on such Notes, and (ii) in addition, to the extent
permitted by applicable law, an amount equal to the Make Whole Amount or the
Applicable Premium, as applicable, as liquidated damages and not as a penalty;
provided, further, that, in the case of an Event of Default of the character
described in
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clauses (e), (f) or (g) of this section 15.1, the principal of all Notes shall
forthwith become due and payable, together with interest accrued thereon
(including any interest accruing after the commencement of any action or
proceeding under the federal bankruptcy laws, as now or hereafter constituted,
or any other applicable domestic or foreign federal or state bankruptcy,
insolvency or other similar law, and any other interest that would have accrued
but for the commencement of such proceeding, whether or not any such interest is
allowed as an enforceable claim in such proceeding), without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and the Obligor shall forthwith upon any such acceleration pay to the
holder or holders of all the Notes then outstanding (i) the entire principal of
and interest accrued on the Notes, and (ii) in addition, to the extent permitted
by applicable law, an amount equal to the Make Whole Amount or the Applicable
Premium, as applicable, as liquidated damages and not as a penalty.
Notwithstanding the foregoing provisions, at any time after the occurrence
of any Event of Default and of notice thereof, if any, by any holder or holders
of Notes and before any judgment, decree or order for payment of the money due
has been obtained by or on behalf of any holder or holders of the Notes, the
Required Holders of the Notes by written notice to the Obligor, may rescind and
annul such Event of Default and/or notice of such Event of Default and the
consequences thereof with respect to all of the Notes (including any Notes which
were accelerated pursuant to the first proviso in the preceding paragraph by any
holder or holders on account of an Event of Default of the character described
in clause (a) or (b) of this section 15.1) if:
(1) the Obligor has paid a sum sufficient to pay
(A) all overdue interest on all Notes;
(B) the principal of (and premium, if any, on) any Notes which
have become due otherwise than by such Event of Default or notice
thereof; and
(C) interest on such overdue principal (and premium, if any)
and, to the extent that payment of such interest is lawful, interest
upon overdue interest, all at the rate for overdue amounts specified
in such Notes; and
(2) all Defaults and Events of Default, other than the non-payment
of amounts which have become due solely by such acceleration, have been
cured or waived as provided in section 18.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
The holder or holders of the Notes will endeavor to furnish to the holders
of Superior Indebtedness (or their agent or representative) copies of any notice
furnished by such holder or holders of the Notes to the Obligor of the
occurrence of an Event of Default and of the acceleration of the Notes pursuant
to this section 15.1, provided that the failure to furnish such copies of any
such notice to the holder or holders of the Superior Indebtedness shall not be
actionable by any Person and shall not have any effect upon any of the rights of
the holder or holders of the Notes on account of any Event of Default or
otherwise.
15.2. Suits for Enforcement, etc. In case any one or more of the Events of
Default specified in section 15.1 shall have occurred and be continuing, and
irrespective of whether any
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Notes have become or have been declared immediately due and payable under
section 15.1, the holder of any Security may proceed to protect and enforce its
rights either by suit in equity or by action at law, or both. Each of the
Issuers stipulates that the remedies at law of the holder or holders of the
Securities in the event of any Event of Default by it or any of its Subsidiaries
in the performance of or compliance with any covenant or agreement in this
Agreement or any of the other Operative Documents are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance thereof, whether
by an injunction against a violation thereof or otherwise. Without limiting the
generality of the foregoing (and without derogating from any provision contained
in this Agreement or any of the other Operative Documents), upon the occurrence
and during the continuance of an Event of Default, the Required Holders of the
Notes at the time outstanding shall, as a group, have the right to apply for and
have a receiver appointed for the Holding Company and its Subsidiaries, or any
one or more of them, by a court of competent jurisdiction in any action taken by
any such holders to enforce their respective rights and remedies hereunder and
under the other Operative Documents in order to manage, protect and preserve the
assets of the Holding Company and its Subsidiaries and continue the operation of
the business of the Holding Company and its Subsidiaries, or to sell or dispose
of the assets of the Holding Company and its Subsidiaries, and to collect all
revenues and profits thereof and apply the same to the payment of all expenses
and other charges of such receivership, including the compensation of the
receiver, and each of the Issuers hereby consents to such appointment without
regard to the presence or absence of any misfeasance or malfeasance or any other
fact or circumstance which otherwise would provide a defense to such
appointment.
15.3. No Election of Remedies. No remedy conferred in this Agreement or in
any of the other Operative Documents upon the holder of any Security is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
thereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
15.4. Remedies Not Waived. No course of dealing between the Holding
Company and any of its Subsidiaries, on the one hand, and any holder of any
Security, on the other hand, and no delay by any such holder in exercising any
rights hereunder or under any of the other Operative Documents shall operate as
a waiver of any rights of any such holder.
15.5. Application of Payments. In case any one or more of the Events of
Default specified in section 15.1 shall have occurred and be continuing, all
amounts to be applied to the prepayment or payment of any Notes shall be
applied, after the payment of all related costs and expenses incurred by the
holders of the Notes (including, without limitation, compensation to any and all
trustees, liquidators, receivers or similar officials and reasonable fees,
expenses and disbursements of counsel) in such order of priority as is
determined by the Required Holders of the Notes entitled to such amounts.
16. Registration, Transfer and Exchange of Securities; Limitations on Transfers.
(a) Securities issued hereunder shall be issued in registered form.
Each of the Issuers shall keep at its principal executive office (which is
now located at the address set forth at the beginning of this Agreement)
registers in which it shall provide for the registration and transfer of
the Securities issued by it. The name and address of each holder of the
Securities shall be registered in such registers. The Issuers shall give
to any institutional holder of any Security promptly (but in any event
within 10 days) following
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request therefor, a complete and correct copy of the names and addresses
of all registered holders of the Securities and the amount and kind of
Securities held by each. Whenever any Security or Securities shall be
surrendered for transfer or exchange, the Issuers at their expense will
execute and deliver in exchange therefor a new Security or Securities (in
such denominations and registered in such name or names as may be
requested by the holder of the surrendered Security or Securities), in the
same aggregate unpaid principal amount (in the case of the Notes and, in
such case, dated so as not to result in any loss of interest and together
with all necessary Note Guarantees) or the same aggregate number of Shares
(in the case of the Warrants and Warrant Shares), as applicable, as that
of the Security or Securities so surrendered. The Issuers may treat the
Person in whose name any Security is registered as the owner of such
Security for all purposes.
(b) Notwithstanding anything to the contrary herein or in any of the
other Operative Documents, no holder of any Security may transfer any
Security to any other Person unless each of the following conditions is
satisfied:
(i) after giving effect to the proposed transfer, (A) the
transferee shall hold at least 10% of the aggregate principal amount
or aggregate number of Shares, as the case may be, of each class of
Securities then outstanding and (B) there are not more than eight
holders of the Securities;
(ii) the transferee is not a competitor of the Holding Company
or any of its Subsidiaries; provided that in no event shall any
bank, insurance company or other institutional investor be deemed,
for purposes of this section 16(b), to be a competitor of the
Holding Company and its Subsidiaries;
(iii) at least 51% of the aggregate principal amount of the
Notes then outstanding is held by the MassMutual Group (as defined
below);
(iv) in the case of any transfer of any Note, the transferee
shall have executed an acknowledgment substantially in the form of
Exhibit 16(b)(iv) attached hereto and delivered the same to the
holders of Superior Indebtedness (or their agent or representative);
and
(v) in the case of any transfer of any Note by any holder of
any Note, the transferor shall deliver to the Obligor an opinion of
counsel, which in the case of the MassMutual Group (as herein
defined) may be in-house counsel (or, in the case of MassMutual
Corporate Investors and MassMutual Participation Investors, an
appropriate officer) to the effect that such transfer does not
violate the provisions of Section 5 of the Securities Act;
provided that the provisions of this section 16(b): (A) shall not apply to
any transfer to any Affiliate of an initial holder of the Securities or to
any Person for whom any initial holder of the Securities serves as
investment advisor or investment manager and (B) shall not apply to any
transfer (other than a transfer described in section 16(b)(ii)) if at the
time of such transfer any Default or Event of Default shall have occurred
and be continuing. As used herein, the term "MassMutual Group" shall mean
Massachusetts Mutual Life Insurance Company, MassMutual Corporate
Investors, MassMutual Participation Investors, MassMutual Corporate Value
Partners Limited, their respective Affiliates and
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any other Person for whom any such Person serves as investment advisor or
investment manager.
17. Replacement of Securities. Upon receipt by the Issuers of reasonably
satisfactory evidence of the loss, theft, destruction or mutilation of any
Security and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnity, and (in the case of mutilation) upon surrender of such
Security, the Issuers at their expense will execute and deliver in lieu of such
Security a new Security of like tenor and, in the case of any new Note, dated so
as not to result in any loss of interest and accompanied by all necessary Note
Guarantees. Your unsecured agreement to indemnify and/or affidavit and that of
any other institutional holder shall constitute satisfactory indemnity and/or
satisfactory evidence of loss, theft or destruction for the purpose of this
section 17.
18. Amendment and Waiver.
(a) Any term of this Agreement and the Other Securities Purchase
Agreements and, unless explicitly provided otherwise therein, of any of
the other Operative Documents may, with the consent of the Issuers, be
amended, or compliance therewith may be waived, in writing only, by the
Required Holders of each class of Securities entitled to the benefits of
such term, provided that (i) without the consent of the holders of all of
the Notes at the time outstanding, no such amendment or waiver shall (A)
change the amount of the principal of or any rate of interest on or
premium payable with respect to any of the Notes or change the payment
terms of any of the Notes or, except as provided in the Notes, subordinate
the obligation of the Obligor (or of any other Person primarily or
secondarily liable therefor) to pay any amount due on such Notes to any
other obligation, or (B) change the percentage of holders of Notes
required to approve any such amendment, effectuate any such waiver or
accelerate payment of the Notes; (ii) without the consent of the holders
of all of the Warrants and Warrant Shares at the time outstanding, no such
amendment or waiver shall (A) modify any of the provisions of section 12,
or (B) change the percentage of holders of the Warrants and Warrant Shares
required to approve any such amendment or effect any such waiver; and
(iii) no such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.
Executed or true and correct copies of any amendment, waiver or consent
effected pursuant to this section 18 shall be delivered by the Issuers to
each holder of Securities forthwith (but in any event not later than five
days) following the effective date thereof.
(b) The Issuers will not, directly or indirectly, request or
negotiate for, or offer or pay any remuneration or grant any security as
an inducement for, any proposed amendment or waiver of any of the
provisions of this Agreement or any of the other Operative Documents
unless each holder of the Securities (irrespective of the kind and amount
of Securities then owned by it) shall be informed thereof by the Issuers
and, if such holder is entitled to the benefit of any such provision
proposed to be amended or waived, shall be afforded the opportunity of
considering the same, shall be supplied by the Issuers with sufficient
information to enable it to make an informed decision with respect thereto
and shall be offered and paid such remuneration and granted such security
on the same terms.
(c) In determining whether the requisite holders of Securities have
given any authorization, consent or waiver under this section 18, any
Securities owned by the
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Holding Company or any of its Affiliates shall be disregarded and deemed
not to be outstanding.
19. Method of Payment of Securities. Irrespective of any provision hereof or of
the other Operative Documents to the contrary, so long as you (or your nominee)
or any other institutional holder shall hold any Security, the Issuers (and each
other Person primarily or secondarily liable therefor) will make all payments
thereon to you or such other institutional holder by the method and at the
address for such purpose specified in Schedule I attached hereto or by such
other method or at such other address as you or such institutional holder may
designate in writing, without requiring any presentation or surrender of such
Security, except that if any Security shall be paid, prepaid and/or repurchased
in full, such Security shall be surrendered to the Issuers promptly following
such payment, prepayment or repurchase and cancelled.
20. Expenses; Indemnity. Whether or not the transactions contemplated by any of
the Operative Documents shall be consummated, the Issuers will pay or cause to
be paid (or reimbursed, as the case may be) and will defend, indemnify and hold
you (and each other holder of any of the Securities) and each of your (and such
other holder's) directors, officers, employees, agents, advisors and Affiliates
(each, an "Indemnitee") harmless (on an after tax basis) in respect of all
costs, losses, expenses (including, without limitation, the reasonable fees,
costs, expenses and disbursements of one counsel for all of the Indemnitees) and
damages (collectively, "Indemnified Costs") incurred by or asserted against any
Indemnitee in connection with the negotiation, execution, delivery, performance
and/or enforcement of this Agreement or any of the other Operative Documents
(including, without limitation, so-called work-outs and/or restructurings and
all amendments, waivers and consents hereunder and thereunder, whether or not
effected) and/or the consummation of the transactions contemplated hereby and
thereby or which may otherwise be related in any way to this Agreement or any
other Operative Documents or such transactions or such Indemnitee's relationship
to the Holding Company or any of its Affiliates or any of its properties and
assets, including, without limitation, any and all Indemnified Costs related in
any way to the requirements of any Environmental Laws (as the same may be
amended, modified or supplemented from time to time) or to any environmental
investigation, assessment, site monitoring, containment, clean up, remediation,
removal, restoration, reporting and sampling, whether or not consented to, or
requested or approved by, any Indemnitee, and whether or not such Indemnified
Cost is attributable to an event or condition originating from any properties or
assets of the Holding Company or any of its Subsidiaries or any other properties
previously or hereafter owned, leased, occupied or operated by the Holding
Company or any of its Subsidiaries. Notwithstanding the foregoing, (a) the
Holding Company shall not have any obligation to an Indemnitee under this
section 20 with respect to any Indemnified Cost to the extent such Indemnified
Cost arises solely as a result of the gross negligence, willful misconduct or
bad faith of such Indemnitee and (b) the Holding Company shall not be liable
with respect to the fees, costs, expenses and disbursements of your counsel if
the sale and purchase of the Securities pursuant to this Agreement and the other
Securities Purchase Agreements is not consummated due to your investment
committee's failure to approve such transaction.
21. Taxes. The Issuers will pay all taxes and fees (including interest and
penalties), including, without limitation, all recording and filing fees,
issuance and documentary stamp and similar taxes, which may be payable in
respect of the execution and delivery of this Agreement and each of the other
Operative Documents and the issuance of the Securities.
118
22. Communications. All communications provided for herein and, unless
explicitly provided otherwise therein, in any of the other Operative Documents
shall be in writing and sent (a) by telecopy if the sender on the same day sends
a confirming copy of such communication by a recognized overnight delivery
service (charges prepaid), (b) by a recognized overnight delivery service
(charges prepaid), or (c) by messenger. Any such communication must be sent (i)
if to the Holding Company or to any of its Subsidiaries, to it at:
Tridex Corporation
00 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx, Xxxxx & Xxxxxx
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
or at such other address (or telecopy number) as may be furnished in writing by
the Holding Company to each holder of any Security and (ii) if to you, at your
address for such purpose set forth in Schedule I attached hereto, with a copy
(which shall not constitute notice) to:
Xxxxxx, Xxxx & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Xx., Esq.
Telecopy No.: (000) 000-0000
and if to any other holder of any Security, at the address of such holder as it
appears on the applicable register maintained pursuant to section 16, or at such
other address as may be furnished in writing by you or by any other holder to
the Holding Company. Communications under this section 22 shall be deemed given
only when actually received.
23. Survival of Agreements, Representations and Warranties, etc. All agreements,
representations and warranties contained herein and in the other Operative
Documents shall be deemed to have been relied upon by you and shall survive the
execution and delivery of this Agreement and each of the other Operative
Documents, the issue, sale and delivery of the Securities and payment therefor
and any disposition of the Securities by you, whether or not any investigation
at any time is made by you or on your behalf. All indemnification provisions,
including, without limitation, those contained in sections 12.5, 20 and 21,
shall survive the date upon which none of the Securities shall be outstanding
and the termination of this Agreement and each of the other Operative Documents.
24. Successors and Assigns; Rights of Other Holders. This Agreement and, unless
explicitly provided otherwise therein, each of the other Operative Documents
shall bind and inure to the benefit of and be enforceable by the Issuers and
you, successors to the Issuers and your
119
successors and assigns, and, in addition, shall inure to the benefit of and be
enforceable by each holder from time to time of any Securities who, upon
acceptance thereof, shall, without further action, be entitled to enforce the
applicable provisions and enjoy the applicable benefits hereof and thereof. The
Issuers may not assign any of its rights or obligations hereunder or under any
of the other Operative Documents without the written consent of all of the
holders of the Securities then outstanding.
25. Purchase for Investment; ERISA.
(a) You represent and warrant (i) that you have been furnished with
all information that you have requested for the purpose of evaluating your
proposed acquisition of the Securities to be issued to you pursuant
hereto, (ii) that you will acquire such Securities for your own account
for investment and not for distribution in any manner that would violate
applicable securities laws, but without prejudice to your rights to
dispose of such Securities or a portion thereof to a transferee or
transferees, in accordance with such laws if at some future time you deem
it advisable to do so and (iii) that you are an "accredited investor" as
such term is defined in Regulation D of the Commission under the
Securities Act. The acquisition of such Securities by you at the Closing
shall constitute your confirmation of the foregoing representations and
warranties. You understand that such Securities are being sold to you in a
transaction which is exempt from the registration requirements of the
Securities Act, and that, in making the representations and warranties
contained in section 5.16, each of the Issuers is relying, to the extent
applicable, upon your representations and warranties contained herein.
(b) You represent that at least one of the following statements is
an accurate representation as to each source of funds (a "Source") to be
used by you to pay the purchase price of the Securities to be purchased by
you hereunder:
(i) the Source is an "insurance company general account" as
defined in Section V(e) of Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995) and, except as you have disclosed to
the Holding Company in writing pursuant to this section (i), the
amount of reserves and liabilities for the general account
contract(s) held by or on behalf of any employee benefit plan or
group of plans maintained by the same employer or employee
organization do not exceed 10% of the total reserves and liabilities
of the general account (exclusive of separate account liabilities)
plus surplus as set forth in the NAIC Annual Statement filed with
the state of domicile of the insurer; or
(ii) the Source is a separate account of an insurance company
maintained by you in which an employee benefit plan (or its related
trust) has an interest, which separate account is maintained solely
in connection with your fixed contractual obligations under which
the amounts payable, or credited, to such plan and to any
participant or beneficiary of such plan (including any annuitant)
are not affected in any manner by the investment performance of the
separate account; or
(iii) the Source is either (A) an insurance company pooled
separate account, within the meaning of XXX 00-0 (xxxxxx Xxxxxxx 00,
0000), xx (X) a bank collective investment fund, within the meaning
of the PTE 91-38 (issued July 12,
120
1991) and, except as you have disclosed to the Issuers in writing
pursuant to this section (iii), no employee benefit plan or group of
plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such
pooled separate account or collective investment fund; or
(iv) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning
of Part V of the QPAM Exemption), no employee benefit plan's assets
that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained
by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of
the total client assets managed by such QPAM, the conditions of Part
I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM
nor a person controlling or controlled by the QPAM (applying the
definition of "control" in Section V(e) of the QPAM Exemption) owns
a 5% or more interest in the Holding Company and (A) the identity of
such QPAM and (B) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to
the Issuers in writing pursuant to this section (iv); or
(v) the Source is a governmental plan; or
(vi) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Issuers in
writing pursuant to this section (vi); or
(vii) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
As used in this section 25(b), the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have
the respective meanings assigned to such terms in Section 3 of ERISA, and
the term "QPAM Exemption" means PTE 84-14 (issued March 13, 1984).
26. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and,
unless explicitly provided otherwise therein, each of the other Operative
Documents, including the validity hereof and thereof and the rights and
obligations of the parties hereunder and thereunder, and all amendments and
supplements hereof and thereof and all waivers and consents hereunder and
thereunder, shall be construed in accordance with and governed by the domestic
substantive laws of The Commonwealth of Massachusetts without giving effect to
any choice of law or conflicts of law provision or rule that would cause the
application of the domestic substantive laws of any other jurisdiction. Each of
the Issuers, to the extent that it may lawfully do so, hereby consents to
service of process, and to be sued, in The Commonwealth of Massachusetts and
consents to the jurisdiction of the courts of The Commonwealth of Massachusetts
and the United States District Court for the District of Massachusetts, as well
as to the jurisdiction of all courts to which an appeal may be taken from such
courts, for the purpose of any suit, action or other proceeding arising out of
any of its obligations hereunder or thereunder or with respect to the
transactions contemplated hereby or thereby, and expressly waives any and all
objections it may have as to venue in any such courts. Each of the Issuers
further agrees that a summons and
121
complaint commencing an action or proceeding in any of such courts shall be
properly served and shall confer personal jurisdiction if served personally or
by certified mail to it at its address referred to in section 22 or as otherwise
provided under the laws of The Commonwealth of Massachusetts. Notwithstanding
the foregoing, each of the Issuers agrees that nothing contained in this section
26 shall preclude the institution of any such suit, action or other proceeding
in any jurisdiction other than The Commonwealth of Massachusetts. EACH OF THE
ISSUERS IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR
OTHER PROCEEDING INSTITUTED BY OR AGAINST IT IN RESPECT OF ITS OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
27. Miscellaneous. The headings in this Agreement and in each of the other
Operative Documents are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof or thereof. This Agreement (together with
the other Operative Documents) embodies the entire agreement and understanding
between you and the Holding Company and supersedes all prior agreements and
understandings relating to the subject matter hereof. Each covenant contained
herein and in each of the other Operative Documents shall be construed (absent
an express provision to the contrary) as being independent of each other
covenant contained herein and therein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. If any provision in this Agreement or in any
of the other Operative Documents refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable, whether such action is taken directly or indirectly by such
Person. In case any provision in this Agreement or any of the other Operative
Documents shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. This Agreement and, unless explicitly provided otherwise
therein, each of the other Operative Documents, may be executed in any number of
counterparts and by the parties hereto or thereto, as the case may be, on
separate counterparts but all such counterparts shall together constitute but
one and the same instrument.
[The remainder of this page is intentionally left blank.]
122
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this Agreement,
whereupon it shall become a binding agreement under seal between you
and the Issuers. Please then return one of such counterparts to the
Issuers.
Very truly yours,
TRIDEX CORPORATION
By
---------------------------
(Title)
TRIDEX NC, INC.
By
---------------------------
(Title)
ULTIMATE TECHNOLOGY
CORPORATION
By
---------------------------
(Title)
The foregoing Agreement is hereby
agreed to as of the date thereof.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By
-------------------------------
(Title)
123
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this Agreement, whereupon it shall
become a binding agreement under seal between you and the Issuers. Please then
return one of such counterparts to the Issuers.
Very truly yours,
TRIDEX CORPORATION
By
---------------------------
(Title)
TRIDEX NC, INC.
By
---------------------------
(Title)
ULTIMATE TECHNOLOGY
CORPORATION
By
---------------------------
(Title)
The foregoing Agreement is hereby
agreed to as of the date thereof.
MASSMUTUAL CORPORATE INVESTORS
By
----------------------------------
(Title)
The foregoing is executed on behalf of MassMutual Corporate Investors, organized
under a Declaration of Trust, dated September 13, 1985, as amended from time to
time. The obligations of such Trust are not personally binding upon, nor shall
resort be had to the property of, any of the Trustees, shareholders, officers,
employees or agents of such Trust, but the Trust's property only shall be bound.
124
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this Agreement, whereupon it shall
become a binding agreement under seal between you and the Issuers. Please then
return one of such counterparts to the Issuers.
Very truly yours,
TRIDEX CORPORATION
By
---------------------------
(Title)
TRIDEX NC, INC.
By
---------------------------
(Title)
ULTIMATE TECHNOLOGY
CORPORATION
By
---------------------------
(Title)
The foregoing Agreement is hereby
agreed to as of the date thereof.
MASSMUTUAL PARTICIPATION INVESTORS
By
--------------------------------
(Title)
The foregoing is executed on behalf of MassMutual Participation Investors,
organized under a Declaration of Trust, dated April 7, 1988, as amended from
time to time. The obligations of such Trust are not personally binding upon, nor
shall resort be had to the property of, any of the Trustees, shareholders,
officers, employees or agents of such Trust, but the Trust's property only shall
be bound.
125
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this Agreement, whereupon it shall
become a binding agreement under seal between you and the Issuers. Please then
return one of such counterparts to the Issuers.
Very truly yours,
TRIDEX CORPORATION
By
---------------------------
(Title)
TRIDEX NC, INC.
By
---------------------------
(Title)
ULTIMATE TECHNOLOGY
CORPORATION
By
---------------------------
(Title)
The foregoing Agreement is hereby
agreed to as of the date thereof.
MASSMUTUAL CORPORATE VALUE
PARTNERS LIMITED
By Massachusetts Mutual Life Insurance
Company, as Investment Manager
By
------------------------------------
(Title)
126
TRIDEX CORPORATION
TRIDEX NC, INC.
ULTIMATE TECHNOLOGY CORPORATION
00 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
April 17, 1998
MASSMUTUAL CORPORATE INVESTORS
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
TRIDEX CORPORATION, a Connecticut corporation (the "Holding Company"),
TRIDEX NC, INC., a North Carolina corporation ("TNC"), and ULTIMATE TECHNOLOGY
CORPORATION, a New York corporation ("UTC" and, together with the Holding
Company and TNC, acting as joint and several obligors, the "Obligor") (sometimes
collectively referred to herein as the "Issuers" and each, individually, as an
"Issuer"), agree with you as follows. Certain capitalized terms used herein are
defined in section 15.
1. Authorization of Securities; Other Purchasers; etc.
(a) The Obligor has authorized the issue and sale of its 19% Senior
Subordinated Notes due April 17, 2005 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes") in
the aggregate principal amount of $11,000,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto.
(b) The Holding Company has authorized the issue and sale of 285,714
shares of its Common Shares (herein, such 285,714 shares, together with
any Shares issued in exchange therefor or replacement thereof, called the
"Purchased Common Shares"). The certificates for the Common Stock are to
be substantially in the form of Exhibit 1(b) attached hereto.
(c) The Holding Company has authorized the issue and sale of its
warrants (herein, together with any warrants issued in exchange therefor
or replacement thereof, called the "Warrants") evidencing rights to
purchase in the aggregate 350,931 shares of Common Shares, subject only to
the approval thereof by the stockholders of the Holding Company. The
Warrants shall be exercisable for consideration of $7.00 per share, shall
expire on April 17, 2008 and shall be substantially in the form of Exhibit
1(c) attached hereto.
127
TRIDEX CORPORATION
TRIDEX NC, INC.
ULTIMATE TECHNOLOGY CORPORATION
00 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
April 17, 1998
MASSMUTUAL PARTICIPATION INVESTORS
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
TRIDEX CORPORATION, a Connecticut corporation (the "Holding Company"),
TRIDEX NC, INC., a North Carolina corporation ("TNC"), and ULTIMATE TECHNOLOGY
CORPORATION, a New York corporation ("UTC" and, together with the Holding
Company and TNC, acting as joint and several obligors, the "Obligor") (sometimes
collectively referred to herein as the "Issuers" and each, individually, as an
"Issuer"), agree with you as follows. Certain capitalized terms used herein are
defined in section 15.
1. Authorization of Securities; Other Purchasers; etc.
(a) The Obligor has authorized the issue and sale of its 19% Senior
Subordinated Notes due April 17, 2005 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes") in
the aggregate principal amount of $11,000,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto.
(b) The Holding Company has authorized the issue and sale of 285,714
shares of its Common Shares (herein, such 285,714 shares, together with
any Shares issued in exchange therefor or replacement thereof called the
"Purchased Common Shares"). The certificates for the Common Stock are to
be substantially in the form of Exhibit 1(b) attached hereto.
(c) The Holding Company has authorized the issue and sale of its
warrants (herein, together with any warrants issued in exchange therefor
or replacement thereof, called the "Warrants") evidencing rights to
purchase in the aggregate 350,931 shares of Common Shares, subject only to
the approval thereof by the stockholders of the Holding Company. The
Warrants shall be exercisable for consideration of $7.00 per share, shall
expire on April 17, 2008 and shall be substantially in the form of Exhibit
1(c) attached hereto.
128
TRIDEX CORPORATION
TRIDEX NC, INC.
ULTIMATE TECHNOLOGY CORPORATION
00 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
April 17, 1998
MASSMUTUAL CORPORATE VALUE
PARTNERS LIMITED
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
TRIDEX CORPORATION, a Connecticut corporation (the "Holding Company"),
TRIDEX NC, INC., a North Carolina corporation ("TNC"), and ULTIMATE TECHNOLOGY
CORPORATION, a New York corporation ("UTC" and, together with the Holding
Company and TNC, acting as joint and several obligors, the "Obligor") (sometimes
collectively referred to herein as the "Issuers" and each, individually, as an
"Issuer"), agree with you as follows. Certain capitalized terms used herein are
defined in section 15.
1. Authorization of Securities; Other Purchasers; etc.
(a) The Obligor has authorized the issue and sale of its 19% Senior
Subordinated Notes due April 17, 2005 (herein, together with any notes
issued in exchange therefor or replacement thereof, called the "Notes") in
the aggregate principal amount of $11,000,000. The Notes are to be
substantially in the form of Exhibit 1(a) attached hereto.
(b) The Holding Company has authorized the issue and sale of 285,714
shares of its Common Shares (herein, such 285,714 shares, together with
any Shares issued in exchange therefor or replacement thereof called the
"Purchased Common Shares"). The certificates for the Common Stock are to
be substantially in the form of Exhibit 1(b) attached hereto.
(c) The Holding Company has authorized the issue and sale of its
warrants (herein, together with any warrants issued in exchange therefor
or replacement thereof, called the "Warrants") evidencing rights to
purchase in the aggregate 350,931 shares of Common Shares, subject only to
the approval thereof by the stockholders of the Holding Company. The
Warrants shall be exercisable for consideration of $7.00 per share, shall
expire on April 17, 2008 and shall be substantially in the form of Exhibit
1(c) attached hereto.
129
