EXHIBIT 10.10
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
INTEGRATED DEFENSE TECHNOLOGIES, INC.
X. X. XXXXXXX MEZZANINE FUND, L.P.
J. H. WHITNEY MARKET VALUE FUND, X.X.
XXXXXXXXX CAPITAL, L.P.
FIRST UNION INVESTORS, INC.
AND
BNY CAPITAL PARTNERS, L.P.
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DATED AS OF SEPTEMBER 29, 2000
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AGREEMENT, dated as of September 29, 2000, by and among Integrated
Defense Technologies, Inc., a Delaware corporation (the "COMPANY"), X. X.
Xxxxxxx Mezzanine Fund, L.P., a Delaware limited partnership ("WMF"), X.X.
Xxxxxxx Market Value Fund, L.P., a Delaware limited partnership ("WMVF"),
XxxxxXxxx Capital, L.P., a Delaware limited partnership ("XXXXXXXXX"), First
Union Investors, Inc., a North Carolina corporation ("FIRST UNION") and BNY
Capital Partners, L.P., a Delaware limited partnership ("BANK OF NEW YORK" and
together with WMF, WMVF, XxxxxXxxx and First Union, the "PURCHASERS" and
individually a "PURCHASER").
W I T N E S S E T H:
WHEREAS, the Company wishes to sell to the Purchasers, and the
Purchasers wish to purchase from the Company, subordinated promissory notes (the
"NOTES"), due December 31, 2007, in the aggregate principal amount of
$51,250,000 upon the terms and subject to the conditions hereinafter set forth;
and
WHEREAS, as an inducement to the Purchasers to purchase the Notes, the
Company wishes to sell to the Purchasers, and the Purchasers wish to purchase
from the Company, warrants (the "WARRANTS") to purchase an aggregate of 3,318
shares of common stock, $.01 par value per share, of the Company (the "COMMON
STOCK"), upon the terms and subject to the conditions hereinafter set forth; and
WHEREAS, it is contemplated that concurrently with the purchase and
sale of the Notes and Warrants (collectively, the "SECURITIES") pursuant to the
terms of this Agreement, the Company will consummate the acquisition (the
"ACQUISITION") of the business and assets (the "TECH-SYM BUSINESS") OF TECH-SYM
CORPORATION, a Nevada corporation ("TECH-SYM"), contemplated by an Agreement and
Plan of Merger (the "MERGER AGREEMENT"), dated as of June 27, 2000, by and among
the Company, T-S Acquisition Corp., a Nevada corporation and a wholly-owned
Subsidiary of the Company, and Tech-Sym; and
WHEREAS, it is contemplated that concurrently with the purchase and
sale of the Securities pursuant to the terms of this Agreement, the Company will
enter into a Credit Agreement (the "ORIGINAL CREDIT AGREEMENT") among the
Company, IDT Holding, L.L.C., the domestic subsidiaries of the Company as may
become parties thereto, the several banks and other financial institutions as
may become parties thereto, First Union National Bank as administrative agent,
CIBC World Markets Corp., as syndication agent ("CIBC"), Credit Lyonnais New
York Branch, as documentation agent, and First Union Securities, Inc. and CIBC,
as co-lead arrangers and joint bookrunners, providing for a $125,000,000 secured
term credit facility, and a $45,000,000 secured revolving credit facility
(collectively, the "SENIOR CREDIT FACILITY"); and
WHEREAS, simultaneously with the Closing, Tech-Sym will divest itself
of all of its interest in (1) TRAK Communications Inc., a Delaware corporation
("TRAK"), and (2) CrossLink, Inc., a Colorado corporation ("CROSSLINK")
(collectively, the "SPIN-OFFS").
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NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, and unless the context requires
a different meaning, the following terms have the meanings indicated:
"ACQUISITION" shall have the meaning assigned to that term in the
preamble hereof.
"ACQUISITION AGREEMENTS" shall mean the Merger Agreement and any and
all agreements or other documents referenced therein or contemplated thereby.
"AFFILIATE" shall mean with respect to any Person (hereafter "FIRST
PERSON") any other Person (a) directly or indirectly controlling, controlled by,
or under common control with, such first Person, (b) directly or indirectly
owning or holding five percent (5%) or more of any equity interest or (c) five
percent (5%) or more of whose voting stock or other equity interest is directly
or indirectly owned or held by such first Person. For purposes of this
definition, "CONTROL" (including with correlative meanings, the terms
"controlling", "CONTROLLED BY" and under "COMMON CONTROL WITH") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AFFILIATED GROUP" shall have the meaning set forth in Section 1504(a)
of the Code.
"AGREEMENT" shall mean this Agreement, including the exhibits and
schedules attached hereto, as the same may be amended, supplemented or modified
in accordance with the terms hereof.
"ASSET DISPOSITION" shall mean the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise of any of the
following: (a) any of the stock of the Company or any of its Subsidiaries or (b)
any or all of the assets of the Company or its Subsidiaries other than sales of
inventory in the ordinary course of business. "NET PROCEEDS" of any Asset
Disposition means cash proceeds received by the Company or any of its
Subsidiaries from any Asset Disposition (including insurance proceeds, awards of
condemnation, and payments under notes or other debt securities received in
connection with any Asset Disposition), net of (x) the costs of such sale,
lease, transfer or other disposition (including taxes attributable to such sale,
lease or transfer), and (y) amounts applied to repayment of Indebtedness secured
by a Lien on the asset or property disposed.
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"BANK OF NEW YORK" shall have the meaning assigned thereto in the first
paragraph hereof.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"BY-LAWS" shall mean, unless the context in which it is used otherwise
requires, the By-laws of each of the Company and its Subsidiaries as in effect
on the Closing Date.
"CAPITAL LEASE" means any lease of property by the Company or any of
its Subsidiaries which, in accordance with GAAP, is or should be reflected as a
capital lease on the balance sheet of such Person.
"CAPITAL LEASE OBLIGATIONS" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
consistently applied and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP consistently applied. The determination of
Capital Lease Obligations at the relevant time of determination with respect to
the Company and its Subsidiaries shall be made on a consolidated basis in
accordance with GAAP consistently applied.
"CAPITAL STOCK" shall mean (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), (iv) in the case of a limited liability
company, membership interests and (v) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"CASH" shall mean the currency of the United States of America.
"CASH EQUIVALENTS" shall mean: (i) marketable direct obligations issued
or unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition thereof;
(ii) commercial paper maturing no more than one (1) year from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's rating service or a least P-1 from Xxxxx'x Investors Service, Inc., (iii)
certificates of deposit or bankers' acceptances maturing within one (1) year
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000; (iv) time deposits
maturing no more than thirty (30) days from the date of creation thereof with
commercial banks having membership in the Federal Deposit Insurance Corporation
in amounts not exceeding the lesser of $100,000 or the maximum amount of
insurance applicable to the aggregate amount of the Company's and its
Subsidiaries, deposits at such
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institution; and (v) deposits or investments in mutual or similar funds offered
or sponsored by brokerage or other companies having membership in the Securities
Investor Protection Corporation in amounts not exceeding the lesser of $100,000
or the maximum amount of insurance applicable to the aggregate amount of the
Company's and its Subsidiaries, deposits at such institution.
"CERTIFICATE OF INCORPORATION" shall mean, unless the context in which
it is used shall otherwise require, the Certificate of Incorporation of the
Company and each of its Subsidiaries as in effect on the Closing Date.
"CIBC" shall have the meaning assigned to that term in the preamble
hereof.
"CLOSING" shall have the meaning assigned to that term in Section 2.4.
"CLOSING DATE" shall have the meaning assigned to that term in Section
2.4.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"COMMISSION" shall mean the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"COMMON STOCK" shall have the meaning assigned to that term in the
preamble hereof, or any other Capital Stock of the Company into which such stock
is reclassified or reconstituted.
"COMPLIANCE CERTIFICATE" shall have the meaning given in Section
8.1(c).
"CONDITION OF THE COMPANY" shall mean the assets, business, properties,
prospects operations, or financial condition of the Company and its
Subsidiaries, taken as a whole, after giving effect to the Acquisition.
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period, all
capital expenditures of the Company and its Subsidiaries on a consolidated basis
for such period, as determined in accordance with GAAP. The term "Consolidated
Capital Expenditures" shall not include capital expenditures in respect of the
reinvestment of proceeds derived from Recovery Events received by the Company
and its Subsidiaries to the extent that such reinvestment is permitted under the
Original Credit Agreement.
"CONSOLIDATED EBITDA" shall mean, for any period, the sum of (i)
Consolidated Net Income for such period, plus (ii) an amount which, in the
determination of Consolidated Net Income for such period, has been deducted for
(A) Consolidated Interest Expense, (B) total federal, state, local and foreign
income, value added and similar Taxes, (C) losses (or MINUS gains) on the sale
or disposition of assets outside the ordinary course of business and (D)
depreciation, amortization expense and other non-cash, non-recurring
extraordinary charges, all as determined in accordance with GAAP, plus (iii)
management fees to the extent paid as permitted by Section 6.17 of the Original
Credit Agreement, plus (iv) costs and expenses incurred by the Company and its
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Subsidiaries in connection with the Acquisition, plus (v) for the first four (4)
fiscal quarters following the Closing Date only, $750,000. Except as otherwise
provided herein, determinations shall be made for the immediately preceding four
(4) fiscal quarters.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, all cash
interest expense of the Company and its Subsidiaries (including, without
limitation, the interest component under Capital Leases), as determined in
accordance with GAAP. For purposes hereof, Consolidated Interest Expense for the
first three complete fiscal quarters to occur after the Closing Date shall be
determined by annualizing Consolidated Interest Expense such that for the first
complete fiscal quarter to occur after the Closing Date such components would be
multiplied by four (4), the first two complete fiscal quarters would be
multiplied by two (2) and the first three fiscal quarters would be multiplied by
one and one-third (1 1/3).
"CONSOLIDATED NET INCOME" shall mean, for any period, net income
(excluding extraordinary items) after taxes for such period of the Company and
its Subsidiaries on a consolidated basis, as determined in accordance with GAAP.
"CONSOLIDATED NET WORTH" shall mean, as at any date of determination,
the consolidated stockholders' equity of the Company and its Subsidiaries, as
determined on a consolidated basis in accordance with GAAP.
"CONTINGENT OBLIGATION" as applied to any Person, shall mean any direct
or indirect liability, contingent or otherwise, of that Person: (i) with respect
to any indebtedness, lease, dividend or other obligation of another Person if
the primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; (ii) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings; or (iii)
under any foreign exchange contract, currency swap agreement, interest rate swap
agreement or other similar agreement or arrangement designed to alter the risks
of that Person arising from fluctuations in currency values or interest rates.
Contingent Obligations shall include (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, and (c) any liability of such Person for the
obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported or, if not a fixed
and determined amount, the maximum amount so guaranteed.
"CONTRACTUAL OBLIGATIONS" shall mean as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
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"CROSSLINK" shall have the meaning assigned thereto in the fifth
Whereas clause hereof.
"DEFINED BENEFIT PLAN" shall mean a defined benefit plan within the
meaning of Section 3(35) of ERISA or Section 414(j) of the Code, whether funded
or unfunded, qualified or non-qualified (whether or not subject to ERISA or the
Code).
"EMPLOYEE STOCK AWARDS" shall have the meaning assigned to that term in
Section 5.18(a) of this Agreement.
"ENVIRONMENTAL LAWS" shall mean any applicable past or presently
effective, foreign, federal, state, territorial, provincial or local law, common
law doctrine, rule, order, decree, judgment, injunction, license, permit or
regulation relating to environmental matters, including those pertaining to land
use, air, soil, surface water, ground water (including the protection, cleanup,
removal, remediation or damage thereof), or relating to emissions, discharges,
disseminations, releases or threatened releases of any Hazardous Materials into
ambient air (indoor and outdoor), land surface or subsurface, surface water,
buildings, facilities, real or personal property or fixtures, or groundwater, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, discharge or handling of any Hazardous
Material, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. 9601 ET SEQ.) ("CERCLA"),
the Hazardous Material Transportation Act (49 U.S.C. 1801 ET SEQ.), the Resource
Conservation and Recovery Act (42 U.S.C. 6901 ET SEQ.) ("RCRA"), the Federal
Water Pollution Control Act (33 U.S.C. 1251 ET SEQ.), the Clean Air Act (42
U.S.C. 1251 ET SEQ.), the Emergency Planning and Community Right-to-Know Act of
1986 (42 U.S.C. 11001 ET SEQ.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. 136 ET SEQ.), the Safe Drinking Water Act (42 U.S.C.
300f ET SEQ.), and the Toxic Substances Control Act (15 U.S.C. 2601 ET SEQ.), as
such laws have been, or are, amended, modified or supplemented heretofore or
from time to time through the Closing Date and any analogous future federal, or
present or future state or local laws, statutes and rules and regulations
promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended and any regulations promulgated or proposed thereunder.
"ERISA AFFILIATE" shall mean a corporation that is or was a member of a
controlled group of corporations with the Company or any of its Subsidiaries
within the meaning of section 4001(a) or (b) of ERISA or section 414(b) of the
Code, a trade or business (including a sole proprietorship, partnership, trust,
estate or corporation) that is under common control with the Company or any of
its Subsidiaries within the meaning of section 414(m) of the Code, or a trade or
business which together with the Company or any of its Subsidiaries is treated
as a single employer under section 414(o) of the Code.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in the
Notes.
"EXERCISABLE SHARES" shall have the meaning assigned to that term in
Section 8.5 hereof.
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"FIXED CHARGE COVERAGE RATIO" shall mean, as of the end of each fiscal
quarter of the Company, for the Company and its Subsidiaries on a consolidated
basis for the four consecutive quarters ending on such date, the ratio of (i)
Consolidated EBITDA for the applicable period MINUS Consolidated Capital
Expenditures for the applicable period to (ii) the sum of Consolidated Interest
Expense for the applicable period PLUS Scheduled Funded Debt Payments for the
applicable period PLUS cash Taxes paid during the applicable period.
Notwithstanding the foregoing, for purposes of calculating the Fixed Charge
Coverage Ratio for the first three complete fiscal quarters to occur after the
Closing Date, the Fixed Charge Coverage Ratio shall be determined by annualizing
the components thereof such that for the first complete fiscal quarter to occur
after the Closing Date such components would be multiplied by four (4), the
first two complete fiscal quarters would be multiplied by two (2), and the first
three complete fiscal quarters would be multiplied by one and one-third (1_);
PROVIDED, HOWEVER, that with respect to the Consolidated Capital Expenditures
component only, for the first three complete fiscal quarters to occur after the
Closing Date, Consolidated Capital Expenditures shall be deemed to be equal to
the lesser of (x) the number obtained as a result of the product of the actual
amount of Consolidated Capital Expenditures for such period times the applicable
multiplier described in the immediately preceding clause or (y) $6,200,000.
"FIRST UNION" shall have the meaning assigned thereto in the first
paragraph hereof.
"FUNDED DEBT" shall mean, with respect to any Person, without
duplication, (a) all Indebtedness of such Person other than Indebtedness of the
types referred to in clause (e), (f) and (i) of the definition of "Indebtedness"
set forth in this Section 1.1, and excluding for the purposes of clause (j) of
such definition of Indebtedness, any performance letters of credit (I.E.,
letters of credit which can be drawn upon only if the Company or any of its
Subsidiaries fails to comply with or perform under any material provision of any
contract) issued for the account of such Person, (b) all Funded Debt of others
of the type referred to in clause (a) above secured by (or for which the holder
of such Funded Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production from,
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (c) all Guaranty Obligations of such Person
with respect to Funded Debt of the type referred to in clause (a) above of
another Person and (d) Funded Debt of the type referred to in clause (a) above
of any partnership or unincorporated joint venture in which such Person is
legally obligated or has a reasonable expectation of being liable with respect
thereto.
"GAAP" shall mean generally accepted accounting principles in effect
within the United States.
"GOVERNMENTAL AUTHORITY" shall mean the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
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"GOVERNMENT CONTRACT" means any contract entered into between the
Company or any of its Subsidiaries and the government of the United States of
America, or any department, agency, public corporation, or other instrumentality
thereof.
"GUARANTY" shall mean the Guaranty dated the date hereof in the form
attached hereto as EXHIBIT F, appropriately completed in conformity with this
Agreement.
"GUARANTY OBLIGATIONS" shall mean, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease or
purchase property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.
"HAZARDOUS MATERIALS" shall mean (i) any chemical pollutant,
contaminant, pesticide, petroleum or petroleum product or byproduct, radioactive
substance and polychlorinated biphenyls (PCBs); (ii) any "hazardous substance"
as defined under CERCLA ss.101(m); and (iii) any hazardous waste defined under
RCRA.
"HEDGING AGREEMENTS" shall mean, with respect to any Person, any
agreement entered into to protect such Person against fluctuations in interest
rates, or currency or raw materials values, including, without limitation, any
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more counterparties, any foreign currency exchange agreement,
currency protection agreements, commodity purchase or option agreements or other
interest or exchange rate or commodity price hedging agreements.
"IDT LLC" shall mean IDT Holding, L.L.C., a Delaware limited liability
company, and the holder of all shares of capital stock of the Company.
"INDEBTEDNESS" shall mean, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made without regard
to any original issue discount relating thereto, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than trade
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debt incurred in the ordinary course of business and due within six months of
the incurrence thereof) which would appear as liabilities on a balance sheet of
such Person, (e) all obligations of such Person under take-or-pay or similar
arrangements or under commodities agreements, (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (g) all Guaranty
Obligations of such Person with respect to Indebtedness of another Person, (h)
the principal portion of all obligations of such Person under Capital Leases,
(i) all obligations of such Person under Hedging Agreements, (j) the maximum
amount of all standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (k) all preferred capital
stock, shares, equivalents of capital stock or any other interest that confers
on a Person the right to receive a share of the profits and losses of, or
distributions of the assets of, the issuing Person, issued by such Person and
which by the terms thereof could be (at the request of the holders thereof or
otherwise) subject to mandatory sinking fund payments, redemption or other
acceleration, (l) the principal balance outstanding under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product, and (m) the Indebtedness of any partnership or
unincorporated joint venture in which such Person is a general partner or a
joint venturer. The amount of any item of Indebtedness of any Person shall be
calculated without deduction for any original issue discount.
"INTERCREDITOR AGREEMENT" shall mean the Subordinated Indebtedness
Intercreditor Agreement, dated as of the date hereof, among the Company, the
Purchasers, the Company's Subsidiaries and IDT LLC in the form attached hereto
as EXHIBIT G.
"INTEREST COVERAGE RATIO" shall mean, with respect to the Company and
its Subsidiaries on a consolidated basis for the twelve month period ending on
the last day of any fiscal quarter of the Company and its Subsidiaries, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest
Expense for such period.
"INVESTMENT" shall mean (i) any direct or indirect purchase or other
acquisition by the Company or any of its Subsidiaries of any beneficial interest
in, including stock, partnership interest or other equity securities of, any
other Person (other than a Person that prior to the relevant purchase or
acquisition was a Subsidiary of the Company) or (ii) any direct or indirect
loan, advance or capital contribution by the Company or any of its Subsidiaries
to any other Person (other than a Subsidiary of the Company), including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. The amount of any Investment shall be the original cost of such
Investment PLUS the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"LEVERAGE RATIO" shall mean, with respect to the Company and its
Subsidiaries on a consolidated basis for the twelve month period ending on the
last day of any fiscal quarter, the ratio of (a) Funded Debt of the Company and
its Subsidiaries on a consolidated basis on the last day of such period to (b)
Consolidated EBITDA for such twelve month period.
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"LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other), charge, claim, restriction
or preference, priority, right or other security interest or preferential
arrangement of any kind or nature whatsoever (excluding preferred stock and
equity related preferences) including, without limitation, those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a Capital Lease Obligation, or any
financing lease having substantially the same economic effect as any of the
foregoing.
"MERGER AGREEMENT" shall have the meaning assigned to that term in the
preamble hereof.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan within the meaning
of Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code.
"NOTE(S)" shall mean the subordinated promissory notes in the aggregate
principal amount of $51,250,000 referred to in the preamble hereof, which notes
are substantially in the form attached hereto as EXHIBIT A, appropriately
completed in conformity with this Agreement.
"ORIGINAL CREDIT AGREEMENT" shall have the meaning assigned to that
term in the preamble hereof.
"OUTSTANDING BORROWINGS" shall mean all Indebtedness of the Company and
its Subsidiaries for money borrowed that is outstanding at the relevant time of
determination.
"PEI" shall mean PEI Electronics, Inc., a Delaware corporation and a
wholly owned Subsidiary of the Company.
"PERMITTED INDEBTEDNESS" shall mean all Indebtedness of the Company and
its Subsidiaries currently outstanding or incurred in the future pursuant to any
borrowing by the Company or any of its Subsidiaries from any bank, finance
company or institutional lender having total assets (together with its
affiliates) in excess of $500,000,000.
"PERSON" shall mean any individual, firm, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, Governmental Authority or other
entity of any kind, and shall include any successor (by merger or otherwise) of
such entity.
"PLANS" shall have the meaning assigned to that term in Section 5.22 of
this Agreement.
"PRO FORMA BALANCE SHEET" shall mean the pro forma consolidated balance
sheet of the Company and its Subsidiaries delivered pursuant to Section 3.12.
"RECOVERY EVENT" shall mean the receipt by the Company or any of its
Subsidiaries of any cash insurance proceeds (whether on account of or
characterized as property insurance, business interruptions insurance, liability
insurance or otherwise) or condemnation award payable by reason
11
of theft, loss, physical destruction or damage, taking or similar event with
respect to any of their respective property or assets.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Amended and Restated
Registration Rights Agreement dated the date hereof by and between the Company,
WMF, WMVF, XxxxxXxxx, First Union and Bank of New York in the form attached
hereto as EXHIBIT C.
"REQUIREMENTS OF LAW" shall mean as to any Person, provisions of the
Certificate of Incorporation and By-laws or other organizational or governing
documents of such Person, or any law, treaty, rule, regulation, right,
privilege, qualification, license or franchise or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable or binding
upon such Person or any of its property or to which such Person or any of its
property is subject or pertaining to any or all of the transactions contemplated
or referred to herein.
"RESTRICTED PAYMENT" shall mean: (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock, limited liability company interest, or partnership interest of the
Company or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock, limited liability
company interest, or partnership interest to the holders of that class; (ii)
any redemption, conversion, exchange, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of stock, limited liability company interest or
partnership interest of the Company or any of its Subsidiaries now or
hereafter outstanding; (iii) any payment or prepayment of interest on,
principal of, premium, if any, redemption, conversion, exchange, purchase,
retirement, defeasance, sinking fund or similar payment with respect to, any
Indebtedness subordinated to the Indebtedness existing pursuant to the Notes
and this Agreement; (iv) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock, limited liability company interest, or
partnership interest of the Company or any of its Subsidiaries now or
hereafter outstanding; and (v) any payment under any noncompete agreement
(excluding payments under noncompete agreements specifically identified on
Schedule 5.26, such payments not to exceed $13,000,000).
"SCHEDULED FUNDED DEBT PAYMENTS" shall mean, as of any date of
determination for the Company and its Subsidiaries, the sum of all scheduled
payments of principal on Funded Debt for the applied period ending on the date
of determination (including the principal component of payments due on Capital
Leases during the applicable period ending on the date of determination).
"SECURITIES" shall have the meaning assigned to such term in the
preamble hereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations thereunder as the
same shall be in effect at the time.
"SENIOR CREDIT FACILITY" shall mean the credit facility referred to in
the preamble hereto provided for in the Senior Loan Agreements.
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"SENIOR LOAN AGREEMENTS" shall mean the Original Credit Agreement and
any and all agreements or other documents referenced therein or contemplated
thereby, and any amendments, modifications, renewals, refinancings, increases,
refundings, restatements or extensions thereof.
"SIERRA" shall mean SierraTech, Inc., a Delaware corporation and a
wholly owned Subsidiary of the Company.
"SIGNIFICANT CUSTOMER CONTRACT" means a contract entered into by the
Company or any of its Subsidiaries to provide goods and/or services to a Person
having a remaining value in excess of $1,000,000 in annual revenues.
"SOLVENT" shall mean, with respect to the Company and its Subsidiaries
considered as a whole, based on the Pro Forma Balance Sheet, that (i) the assets
and the property of the Company and its Subsidiaries, considered as a whole,
exceed the aggregate liabilities (including contingent and unliquidated
liabilities) of the Company and its Subsidiaries, considered as a whole, (ii)
after giving effect to the transactions contemplated by this Agreement, the
Company and its Subsidiaries, considered as a whole, will not be left with
unreasonably small capital, and (iii) after giving effect to the transactions
contemplated by this Agreement, the Company and its Subsidiaries, considered as
a whole, are able to both service and pay their liabilities as they mature. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed as the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that is likely to
become an actual or matured liability.
"SPIN-OFFS" shall have the meaning assigned to such term in the
preamble hereof.
"STOCKHOLDERS' AGREEMENT" shall mean the Amended and Restated
Stockholders' Agreement dated the date hereof by and among the Company, WMF,
WMVF, XxxxxXxxx, First Union, Bank of New York, IDT LLC and The Veritas Capital
Fund, L.P. in the form attached hereto as EXHIBIT D.
"SUBSIDIARY" shall mean, with respect to any Person, a corporation or
other entity of which more than 50% of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company after completion of the Spin-Offs.
"TAX" shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, capital stock, franchise profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on-minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto.
"TAX RETURN" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
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"TOTAL CONSIDERATION" shall mean the total consideration paid with
respect to any acquisition, including without limitation (u) all payments made
in cash and property, (v) all payments made in stock, (w) the amounts paid or to
be paid pursuant to non-compete agreements and consulting agreements, (x) the
amount of liabilities assumed (and in the case of a stock acquisition, the
amount of liabilities of the Person to be acquired) (y) the amount of seller
subordinated indebtedness incurred in connection with such acquisition and (z)
the amount of all transaction fees.
"TRAK" shall have the meaning assigned to such term in the fifth
Whereas clause hereof.
"TRANSACTION DOCUMENTS" shall mean collectively, this Agreement and all
agreements, instruments and other documents relating to this Agreement,
including, without limitation, the Notes, the Warrants, the Registration Rights
Agreement, the Stockholders' Agreement, the Guaranty, the Certificate of
Incorporation and the By-laws.
"WARRANTS" shall mean the warrants referred to in the preamble hereof,
which warrants are substantially in the form attached hereto as EXHIBIT B,
appropriately completed in conformity with this Agreement.
"WHITNEY" shall mean Whitney & Co.
"WHITNEY ENTITIES" shall mean WMF, WMVF, XxxxxXxxx and Xxxxxxx.
1.2 ACCOUNTING TERMS; FINANCIAL STATEMENTS. All accounting terms used
herein and not expressly defined in this Agreement shall have the respective
meanings given to them in conformance with GAAP. Financial statements and other
information furnished after the date hereof pursuant to the Agreement or the
other Transaction Documents shall be prepared in accordance with GAAP as in
effect at the time of such preparation, PROVIDED, HOWEVER, that no "ACCOUNTING
CHANGES" (as defined below) shall be taken into account in determining
compliance with the financial covenants, standards or terms in this Agreement.
The Company shall prepare footnotes to each Compliance Certificate and the
financial statements required to be delivered hereunder that show the
differences between the basis for calculating financial covenant compliance (the
calculation of financial covenant compliance shall not be based upon nor reflect
such Accounting Changes) and the financial statements delivered (which shall
reflect such Accounting Changes). "ACCOUNTING CHANGES" means: (a) changes in
accounting principles required by GAAP and implemented by the Company; (b)
changes in accounting principles recommended by the Company's certified public
accountants and implemented thereby; and (c) changes in carrying value of the
Company's or any of its Subsidiaries' assets, liabilities or equity accounts
resulting from (i) the application of purchase accounting principles (A.P.B. 16
and/or 17 and EITF 88-16 and FASB 109) to the purchase and sale of the
Securities or the other transactions described in the Transaction Documents, or
(ii) as the result of any other adjustments that, in each case, were applicable
to, but not included in, the Pro Forma Balance Sheet. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including, but
not limited to, capitalization of costs and expenses or payment of pre-Closing
Date liabilities) shall be treated as expenses in the period the
14
expenditures are made. Notwithstanding anything to the contrary contained
herein, for the purposes of this Agreement, the amount of any item of
Indebtedness of any Person shall be calculated without deduction for any
original issue discount.
1.3 KNOWLEDGE OF THE COMPANY. All references to the knowledge of the
Company or to facts known by the Company shall mean actual knowledge or notice
of its Chairman, Chief Executive Officer, President, Chief Financial Officer or
other executive officer of the Company, any of its Subsidiaries or any division
of the Company or any of its Subsidiaries, or knowledge which such Person could
reasonably have acquired through the exercise of due inquiry.
ARTICLE II
PURCHASE AND SALE OF THE SECURITIES
2.1 PURCHASE AND SALE OF THE NOTES.
(a) Subject to the terms and conditions herein set forth, the Company
agrees that it will issue and sell to WMF, and WMF agrees that it will acquire
from the Company, on the Closing Date, a Note in the principal amount of
$25,000,000 (the "WMF NOTE"). The consideration for the WMF Note shall be paid
by (i) the surrender of that certain 12% Senior Subordinated Promissory Note due
December 31, 2006 made by PEI and Sierra and held by WMF (the "1999 NOTE") which
1999 Note upon such surrender shall be canceled and be null and void and which
the parties acknowledge has a current fair market value equal to its "adjusted
issue price" (within the meaning of Code Section 1272) of $20,761,319; and (ii)
the payment of $3,560,386 by wire transfer.
(b) Subject to the terms and conditions herein set forth, the Company
agrees that it will issue and sell to WMVF, and WMVF agrees that it will acquire
from the Company, on the Closing Date, a Note in the principal amount of
$4,250,000, for a purchase price of $4,035,105.
(c) Subject to the terms and conditions herein set forth, the Company
agrees that it will issue and sell to XxxxxXxxx, and XxxxxXxxx agrees that it
will acquire from the Company, on the Closing Date, a Note in the principal
amount of $2,000,000, for a purchase price of $1,898,873.
(d) Subject to the terms and conditions herein set forth, the Company
agrees that it will issue and sell to First Union, and First Union agrees that
it will acquire from the Company, on the Closing Date, a Note in the principal
amount of $10,000,000, for a purchase price of $9,494,364.
(e) Subject to the terms and conditions herein set forth, the Company
agrees that it will issue and sell to Bank of New York, and Bank of New York
agrees that it will acquire from the Company, on the Closing Date, a Note in the
principal amount of $10,000,000, for a purchase price of $9,494,364.
(f) The Notes shall be substantially in the form attached hereto as
EXHIBIT A, appropriately completed in conformity herewith.
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2.2 PURCHASE AND SALE OF THE WARRANTS.
(a) Subject to the terms and conditions herein set forth, the Company
agrees that it will issue and sell to WMF, and WMF agrees that it will acquire
from the Company, on the Closing Date, a warrant to purchase 415 shares of
Common Stock for a purchase price of $189,614. That certain Common Stock
Purchase Warrant dated August 6, 1999 issued by the Company to WMF (the "1999
WARRANT") shall remain in full force and effect.
(b) Subject to the terms and conditions herein set forth, the Company
agrees that it will issue and sell to WMVF, and WMVF agrees that it will acquire
from the Company, on the Closing Date, a warrant to purchase 470 shares of
Common Stock, for a purchase price of $214,895.
(c) Subject to the terms and conditions herein set forth, the Company
agrees that it will issue and sell to XxxxxXxxx, and XxxxxXxxx agrees that it
will acquire from the Company, on the Closing Date, a warrant to purchase 221
shares of Common Stock, for a purchase price of $101,127.
(d) Subject to the terms and conditions herein set forth, the Company
agrees that it will issue and sell to First Union, and First Union agrees that
it will acquire from the Company, on the Closing Date, a warrant to purchase
1,106 shares of Common Stock, for a purchase price of $505,636.
(e) Subject to the terms and conditions herein set forth, the Company
agrees that it will issue and sell to Bank of New York, and Bank of New York
agrees that it will acquire from the Company, on the Closing Date, a warrant to
purchase 1,106 shares of Common Stock, for a purchase price of $505,636.
(f) The Warrants shall be substantially in the form attached hereto as
EXHIBIT B, appropriately completed in conformity herewith.
2.3 FEES AT CLOSING. Concurrently with the execution hereof, the Company
shall (a) reimburse the Whitney Entities' reasonable out-of-pocket expenses
(including, without limitation, fees, charges and disbursements of counsel and
consultants) incurred in connection with (i) the negotiation and execution and
delivery of this Agreement and the Transaction Documents and the Whitney
Entities' due diligence investigation, (ii) the transactions contemplated by
this Agreement and the Transaction Documents; (b) pay to or for the account of
each Purchaser an amount equal to 1.75% of the principal amount of the Note
being purchased by each such Purchaser pursuant to this Agreement; and (c) pay
any other amount owed to, or for the account of, the Whitney Entities through
the Closing Date, all of which payments shall be made by wire transfer of
immediately available funds to an account or accounts designated by WMF.
2.4 CLOSING. The purchase and issuance of the Securities shall take place
at the closing (the "CLOSING") to be held at the same location, time and date as
the closing of the Acquisition, PROVIDED such closing takes place in New York
City (the "CLOSING DATE"). At the Closing, the Company shall deliver the Notes
and the Warrants to the Purchasers against delivery by the Purchasers of the
consideration therefor.
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2.5 FINANCIAL ACCOUNTING POSITIONS; TAX REPORTING.
(a) Each of the parties hereto agrees to take reporting and other
positions with respect to the Securities which are consistent with the
consideration for the Securities set forth herein for all financial accounting
purposes, unless otherwise required by applicable GAAP or Commission rules (in
which case the parties agree only to take positions inconsistent with the
consideration of the Securities set forth herein provided that the Purchasers
have consented thereto, which consent shall not be unreasonably withheld).
ARTICLE III
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS
TO PURCHASE THE SECURITIES
The obligation of the Purchasers to purchase the Notes and the
Warrants, to pay the consideration therefor at the Closing and to perform any
obligations hereunder shall be several and not joint, and shall be subject to
the satisfaction as determined by, or waived by, the Purchasers of the following
conditions on or before the Closing Date; PROVIDED, HOWEVER, that any waiver of
a condition shall not be deemed a waiver of any breach of any representation,
warranty, agreement, term or covenant or of any misrepresentation by the
Company.
3.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Article 5 hereof shall be true and correct at and as of
the date hereof and the Closing Date as if made at and as of such date and after
giving effect to the Acquisition, and the Purchasers shall have received at the
Closing a certificate to the foregoing effect, dated the Closing Date, and
executed by the Chief Executive Officer, President or a Vice President of the
Company.
3.2 COMPLIANCE WITH THIS AGREEMENT. The Company shall have performed and
complied with all of its agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by such party on or
before the Closing Date, and the Purchasers shall have received at the Closing a
certificate to the foregoing effect, dated the Closing Date, and executed by the
Chief Executive Officer, President or a Vice President of the Company.
3.3 SECRETARY'S CERTIFICATES. The Purchasers shall have received
certificates from the Company, dated the Closing Date and signed by its
Secretary or an Assistant Secretary, certifying (a) that the attached copies of
its Certificate of Incorporation and By-laws and resolutions of the Board of
Directors approving the Transaction Documents to which it is a party and the
transactions contemplated hereby and thereby are all true, complete and correct
and remain unamended and in full force and effect, and (b) the incumbency and
specimen signature of each of its officers executing any Transaction Document to
which it is a party or any other document delivered in connection herewith and
therewith.
3.4 DOCUMENTS. The Purchasers shall have received true, complete and
correct copies of such agreements, schedules, exhibits, certificates, documents,
financial information and filings as they may request in connection with or
relating to the transactions contemplated hereby, all in form and substance
satisfactory to the Purchasers.
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3.5 PURCHASE OF SECURITIES PERMITTED BY APPLICABLE LAWS. The acquisition of
and payment for the Securities to be acquired by the Purchasers hereunder and
the consummation of the transactions contemplated hereby and by the Transaction
Documents (a) shall not be prohibited by any Requirement of Law, (b) shall not
subject the Purchasers to any penalty or other onerous condition under or
pursuant to any Requirement of Law, and (c) shall be permitted by all
Requirements of Law to which the Purchasers or the transactions contemplated by
or referred to herein or in the Transaction Documents are subject; and the
Purchasers shall have received such certificates or other evidence as they may
reasonably request to establish compliance with this condition.
3.6 OPINION OF COUNSEL. The Purchasers shall have received an opinion of
outside counsel to the Company and its Subsidiaries, dated as of the Closing
Date, relating to the transactions contemplated by or referred to herein, in
form and substance acceptable to the Purchasers.
3.7 APPROVAL OF COUNSEL TO THE PURCHASERS. All actions and proceedings
hereunder and all agreements, schedules, exhibits, certificates, financial
information, filings and other documents required to be delivered by the Company
and each of its Subsidiaries hereunder or in connection with the consummation of
the transactions contemplated hereby, and all other related matters, shall have
been in form and substance acceptable to Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP,
counsel to WMF and certain of the other Purchasers, in its reasonable judgment
(including, without limitation, the opinion of counsel referred to in Section
3.6 hereof).
3.8 CONSENTS AND APPROVALS. All consents, exemptions, authorizations, or
other actions by, or notices to, or filings with, Governmental Authorities and
other Persons in respect of all Requirements of Law and with respect to those
Contractual Obligations of the Company and each of its Subsidiaries necessary,
desirable, or required in connection with the execution, delivery or performance
(including, without limitation, the payment of interest on the Notes and the
issuance of Common Stock upon the exercise of the Warrants) by the Company, or
enforcement against the Company and/or its Subsidiaries, of the Transaction
Documents to which each is a party shall have been obtained and be in full force
and effect, and the Purchasers shall have been furnished with appropriate
evidence thereof, and all waiting periods shall have lapsed without extension or
the imposition of any conditions or restrictions.
3.9 REGISTRATION RIGHTS AGREEMENT. The Company shall have duly executed and
delivered the Amended and Restated Registration Rights Agreement.
3.10 STOCKHOLDERS' AGREEMENT. The Amended and Restated Stockholders'
Agreement shall have been duly executed and delivered by all of the parties
thereto.
3.11 NO MATERIAL JUDGMENT OR ORDER. There shall not be on the Closing Date
any judgment or order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which, in the judgment of the Purchasers, would prohibit the purchase of the
Securities hereunder or subject the Purchasers to any penalty or
18
other onerous condition under or pursuant to any Requirement of Law if the
Securities were to be purchased hereunder.
3.12 PRO FORMA BALANCE SHEET. The Company shall have delivered to the
Purchasers as of the Closing Date a pro forma consolidated balance sheet of the
Company and its Subsidiaries after giving effect to the Acquisition, certified
by the chief financial officer of the Company that it fairly presents the pro
forma adjustments reflecting the consummation of the transactions contemplated
by the Transaction Documents and the Acquisition, including all material fees
and expenses in connection therewith.
3.13 GOOD STANDING CERTIFICATES. The Company shall have delivered to the
Purchasers as of the Closing Date, good standing certificates for the Company
and each of its Subsidiaries for each of their respective jurisdictions of
incorporation and all other jurisdictions where they do business.
3.14 NO LITIGATION. No action, suit or proceeding before any court or any
Governmental Authority shall have been commenced or threatened, no investigation
by any Governmental Authority shall have been commenced and no action, suit or
proceeding by any Governmental Authority shall have been threatened against any
of the Purchasers, the Company, or any Subsidiary (i) seeking to restrain,
prevent or change any of the transactions contemplated hereby or questioning the
validity or legality of any of such transactions, or (ii) which would, if
resolved adversely to any of the Purchasers, Company or any such Subsidiary,
severally or in the aggregate, materially and adversely affect the Condition of
the Company.
3.15 ACQUISITION. The Acquisition shall be consummated in accordance with
terms and conditions of the Merger Agreement, and otherwise on terms and
conditions reasonably acceptable to the Purchasers.
3.16 REDEMPTION OF NOTES; ACCRUED INTEREST. PEI and Sierra shall have paid
to WMF all accrued but unpaid interest on the 1999 Note to the date of Closing
in the aggregate amount of $630,416.67.
3.17 SENIOR CREDIT FACILITY; SUBORDINATION. The Original Credit Agreement
shall have been consummated on terms and conditions satisfactory to the
Purchasers, including, without limitation, pricing and scheduled amortization.
Without limiting the foregoing, the Senior Credit Facility shall consist of,
without limitation: (i) a $45,000,000 revolving credit facility with a five year
maturity, initially bearing interest at a rate of LIBOR plus 350 basis points,
which shall have at least $15,000,000 of availability on the Closing Date after
consummation of all transactions contemplated by or referred to in this
Agreement, including the Spin-Offs; (ii) a $50,000,000 Term Loan A with a five
year maturity, initially bearing interest at a rate of LIBOR plus 350 basis
points; and (iii) a $75,000,000 Term Loan B with a six year maturity, initially
bearing interest at a rate of LIBOR plus 400 basis points.
3.18 GUARANTY. Each of the Company's Subsidiaries set forth on Schedule
5.17 hereto and IDT LLC shall have executed and delivered the Guaranty.
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3.19 EQUITY. IDT LLC shall have purchased, as of the Closing Date, an
aggregate 18,292 shares of the Company's Common Stock for an aggregate purchase
price of $20,500,000, on terms and conditions satisfactory to the Purchasers,
and The Veritas Capital Fund, L.P., a Delaware limited partnership ("VERITAS")
shall have purchased Capital Stock of IDT LLC for an aggregate purchase price of
not less than $17,000,000.
3.20 CAPITALIZATION. As of the Closing Date, after giving effect to the
transactions contemplated hereby and in the other Transaction Documents, the
ownership of all of the Capital Stock of the Company after giving effect to the
exercise of all warrants, options, rights and securities convertible into or
exercisable for capital stock of the Company, shall be as follows: IDT LLC:
88.5%; and Purchasers: 11.5%.
3.21 NO MATERIAL ADVERSE CHANGE. On the Closing Date, there shall have been
no change, since June 23, 2000, in the Company, any of its Subsidiaries,
Tech-Sym and/or the capital markets that would have a material adverse effect on
the Condition of the Company or the Tech-Sym Business.
3.22 DUE DILIGENCE. The Purchasers shall have completed their due diligence
review in connection with the Acquisition and the results thereof shall be
satisfactory to the Purchasers.
3.23 ORGANIZATIONAL DOCUMENTS. Amendments satisfactory to WMF of the
Certificate of Incorporation and Bylaws of the Company shall have been duly
adopted.
3.24 MANAGEMENT TEAM. Xxx Xxxxxx shall be the active President of the
Company.
3.25 SBIC DOCUMENTS. The Company shall have duly executed and delivered all
documents required by any Purchaser on account of its status as a Small Business
Investment Company licensed by the United States Small Business Administration,
all in form and substance satisfactory to the relevant Purchaser.
3.26 CONSULTING REPORT; ACCOUNTING REPORT.
(a) WMF shall have had the opportunity to review the consulting
report prepared by CSP Associates, Inc. with respect to Tech-Sym customer calls,
and the results of such report shall be satisfactory to WMF.
(b) WMF shall have had the opportunity to review the final
accounting report prepared by PricewaterhouseCoopers LLC in connection with the
Acquisition and the substance of such report shall be satisfactory to WMF.
3.27 SPIN-OFFS. On the Closing Date, contemporaneously with or immediately
after the consummation of the purchase and sale of the Securities pursuant to
this Agreement:
(a) The merger contemplated in the Merger Agreement, dated as of
the date hereof, among Tech-Sym, TRAK, TRAK Acquisition Co. and Trak Holding
Corp. (an Affiliate of Veritas) shall have been consummated on the terms and
conditions set forth in such agreement
20
and otherwise on terms and conditions reasonably acceptable to the Purchasers,
and the Company and/or Tech-Sym shall have received not less than $50,500,000 in
net cash proceeds from such merger; and
(b) All issued and outstanding Capital Stock of CrossLink shall
have been sold in accordance with the terms and conditions of the Stock Purchase
Agreement, dated as of the date hereof, among Tech-Sym, CrossLink and CrossLink
Holding Corp. (an Affiliate of Veritas) and otherwise on terms and conditions
reasonably acceptable to Purchasers.
3.28 MINIMUM EBITDA. The Purchasers shall have received evidence
satisfactory to them, provided by the Company, that Consolidated EBITDA of (i)
the Company, (ii) the Acquired Companies (as defined in the Senior Loan
Agreements), and (iii) Continental Electronics Corporation (less its
discontinued operations) and the net amount of cost savings less corporate
overhead as approved by WMF (in an aggregate amount not to exceed $750,000) for
the twelve month period ended August 31, 2000, on a pro forma adjusted basis,
taking into account the Acquisition, the financings thereof and the other
transactions contemplated hereby and by the Senior Loan Agreements as if such
transactions had occurred on the first day of such 12-month period, was not less
than $39,000,000.
3.29 INTERCREDITOR AGREEMENT. The Intercreditor Agreement shall have been
duly executed and delivered by all of the parties thereto.
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY TO ISSUE AND SELL THE SECURITIES
The obligations of the Company to issue and sell the
Securities and to perform its other obligations hereunder relating thereto shall
be subject to the satisfaction as determined by, or waived by, the Company of
the following conditions on or before the Closing Date:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Purchasers contained in Article 6 hereof shall be true and correct at and as
of the date hereof and the Closing Date as if made at and as of such date.
4.2 COMPLIANCE WITH THIS AGREEMENT. The Purchasers shall have performed and
complied with all of their respective agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by the
Purchasers on or before the Closing Date.
4.3 NO PROCEEDINGS, ETC. No action, suit or proceeding before any court or
any Governmental Authority shall have been commenced or threatened, no
investigation by any Governmental Authority shall have been commenced and no
action, suit or proceeding by any Governmental Authority shall have been
threatened against any of the Purchasers, the Company, or any Subsidiary, (i)
seeking to restrain, prevent or change the transactions contemplated hereby or
questioning the validity or legality of any of such transactions, or (ii) which
would, if resolved adversely to the Purchasers, the Company or any Subsidiary,
severally or in the aggregate, materially and adversely affect the Condition of
the Company.
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4.4 CANCELLATION OF 1999 NOTE. WMF shall have delivered to the Company,
marked canceled, the 1999 Note.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers as follows
(all such representation and warranties to be made as if the Acquisition has
been consummated):
5.1 CORPORATE EXISTENCE AND POWER. The Company and each of its
Subsidiaries: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power and authority to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently, or is currently proposed to be, engaged; (c) is, duly qualified as
a foreign entity, licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, except to the extent that the
failure to do so would not have a material adverse effect on the Condition of
the Company; and (d) has the corporate power and authority to execute, deliver
and perform its obligations under each Transaction Document to which it is or
will be a party and to borrow hereunder. SCHEDULE 5.1 contains a true and
correct list of the Company and each Subsidiary and each jurisdiction where its
ownership, lease or operation of property or the conduct of its business would
require it to be qualified to do business as a foreign entity.
5.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by each of the Company and each Subsidiary of each Transaction
Document to which it is a party and the consummation of the transactions
contemplated hereby and thereby, including without limitation the issuance of
the Securities: (a) has been duly authorized by all necessary corporate, and if
required, stockholder action; (b) does not contravene the terms of its
Certificate of Incorporation or By-Laws, or any amendment thereof; and (c) will
not violate, conflict with or result in any breach or contravention of or the
creation of any Lien under, any Contractual Obligation of the Company or any of
its Subsidiaries or any Requirement of Law applicable to the Company or any of
its Subsidiaries.
5.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. No approval, consent,
compliance, exemption, authorization, or other action by, or notice to, or
filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by (including, without limitation, the payment of interest on the
Notes and the issuance of Common Stock upon the exercise of the Warrants), or
enforcement against, the Company or any Subsidiary of the Transaction Documents
to which it is a party or the consummation of the transactions contemplated
hereby or thereby.
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5.4 BINDING EFFECT. This Agreement has been, and each of the Transaction
Documents to which the Company or any Subsidiary will be a party will be, duly
executed and delivered by the Company and such Subsidiary, and this Agreement
constitutes, and such Transaction Documents will constitute, the legal, valid
and binding obligation of the Company and such Subsidiary enforceable against
the Company and such Subsidiary in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity relating to enforceability.
5.5 NO LEGAL BAR. Neither the execution, delivery and performance of the
Transaction Documents nor the issuance of or performance of the terms of the
Securities will violate any Requirement of Law or any Contractual Obligation of
the Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has previously entered into any agreement which is currently in
effect or to which the Company or any of its Subsidiaries is currently bound,
granting any rights to any Person which are inconsistent with the rights to be
granted by the Company or any of its Subsidiaries in the Transaction Documents.
5.6 LITIGATION. Except as set forth on SCHEDULE 5.6, there are no legal
actions, suits, proceedings, claims or disputes pending or, to the knowledge of
the Company or any of its Subsidiaries, threatened, at law, in equity, in
arbitration or before any Governmental Authority against or affecting the
Company or any of its Subsidiaries (or, as applicable, to the Company's
knowledge, any of their respective shareholders, directors, officers, employees
or agents). No injunction, writ, temporary restraining order, decree or any
order of any nature has been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery or performance of the
Transaction Documents.
5.7 COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 5.7, the Company
and each of its Subsidiaries are in compliance with all Requirements of Law
applicable to them, except where such noncompliance, individually or in the
aggregate, would not have a material adverse effect on the Condition of the
Company.
5.8 NO DEFAULT OR BREACH. No event has occurred and is continuing or would
result from the incurring of obligations by the Company and its Subsidiaries
under the Transaction Documents which constitutes or, with the giving of notice
or lapse of time or both, would constitute an Event of Default. Neither the
Company nor any of its Subsidiaries is in default under or with respect to any
Contractual Obligation, except for such defaults which individually or in the
aggregate, would not have a material adverse effect on the Condition of the
Company.
5.9 TITLE TO PROPERTIES.
(a) SCHEDULE 5.9(a) contains a true, complete and correct list of all
real property reflected on the Pro Forma Balance Sheet or used in connection
with the respective businesses of the Company and each of its Subsidiaries. The
Company and/or its Subsidiaries have good, indefeasible and marketable title in
and to all real property and good title to all other properties reflected on the
Pro Forma Balance Sheet or used in connection with their respective businesses,
in each case, free and clear of all Liens, liabilities and rights except as
provided on SCHEDULE 5.9(a).
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(b) The Company and/or its Subsidiaries hold all of the right, title
and interest of the tenant under the leases reflected on the Pro Forma Balance
Sheet or used in connection with their respective businesses free and clear of
all Liens, liabilities and rights except as provided on SCHEDULE 5.9(b).
5.10 USE OF REAL PROPERTY. Except as set forth on SCHEDULE 5.10, the owned
and leased real properties reflected on the Pro Forma Balance Sheet or used in
connection with the respective businesses of the Company and its Subsidiaries,
are used and operated in compliance and conformity with all applicable leases,
contracts, commitments, licenses and permits, except to the extent that the
failure so to comply would not, in the aggregate, materially adversely affect
the Condition of the Company. Each lease relating to leased real property
reflected on the Pro Forma Balance Sheet or used in connection with the business
of the Company and its Subsidiaries is in full force and effect and the Company
enjoys peaceful and undisturbed possession thereunder. There is no default on
the part of the Company or any of its Subsidiaries or event or condition which
with notice or lapse of time, or both, would constitute a default on the part of
the Company or any of its Subsidiaries under any such lease. There are no
actions, suits or proceedings pending or, to the knowledge of the Company,
threatened against the real property or the leased property on the Pro Forma
Balance Sheet or used in connection with the business of the Company and its
Subsidiaries, at law or in equity, before any federal, state, municipal or
governmental department, commission, board, bureau, agency or instrumentality
which either singly or in the aggregate, if determined adversely, would have a
material adverse effect on the Condition of the Company.
5.11 TAXES.
(a) Except as set forth in Schedule 5.11, (i) each of the Company and
its Subsidiaries other than PEI and its Subsidiaries, and (ii) since January 10,
1997, and with respect to periods prior to January 10, 1997, to the Company's
knowledge, each of PEI and its Subsidiaries has filed all Tax Returns that it
was required to file except for such Tax Returns the failure to file which would
not have a material adverse effect on the Condition of the Company. All such Tax
Returns were correct and complete in all material respects. Except as set forth
in Schedule 5.11, all Taxes owed by the Company or any of its Subsidiaries
(whether or not shown on any Tax Return) have been paid. Neither the Company nor
any of its Subsidiaries currently is the beneficiary of any extension of time
within which to file any Tax Return with respect to (x) the Company and its
Subsidiaries other than PEI and its Subsidiaries, and (y) since January 10,
1997, and with respect to periods prior to January 10, 1997 to the Company's
knowledge, PEI and its Subsidiaries, except as set forth in Schedule 5.11, no
claim has ever been made by a Governmental Authority in a jurisdiction where the
Company or any of its Subsidiaries does not file Tax Returns that the Company or
any of its Subsidiaries is or may be subject to taxation by that jurisdiction.
There are no Liens on any of the assets of the Company or any of its
Subsidiaries that arose in connection with any failure (or alleged failure) to
pay any Tax.
(b) Each of the Company and its Subsidiaries has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractors, creditor, stockholder, or other
third party.
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(c) Neither the Company nor any of its Subsidiaries expects any
Governmental Authority to assess any additional Taxes for any period for which
Tax Returns have been filed. There is no dispute or claim concerning any Tax
Liability of the Company or any of its Subsidiaries either (i) claimed or raised
by any Governmental Authority in writing or (ii) as to which the Company has
knowledge based upon personal contact with any agent of such authority. SCHEDULE
5.11 lists all federal, state, local, and foreign income Tax Returns filed with
respect to any of the Company and its Subsidiaries which are currently the
subject of audit, investigation, litigation or other controversy. As to all such
Tax Returns, the Company has delivered to the Purchasers correct and complete
copies of all federal income Tax Returns, examination reports and statements of
deficiencies.
(d) Neither the Company nor any of its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency, which extension or waiver is
currently in effect.
(e) Neither the Company nor any of its Subsidiaries has, since January
10, 1997, made any payments, is obligated to make any payments, or is a party to
any agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code ss.280G. Neither the Company nor
any of its Subsidiaries is a party to any Tax allocation or sharing agreement.
(f) Neither the Company nor any of its Subsidiaries has any liability
for the Taxes of any person or entity other than the Company and its
Subsidiaries (i) under Reg. ss.1.1502-6 (or any similar provision of state,
local or foreign law), (ii) as a transferee or successor, (iii) by contract, or
(iv) otherwise.
(g) Except as set forth in SCHEDULE 5.11, there are currently no
pending Tax controversies relating to the Company or, to the knowledge of the
Company, involving the Affiliated Group of which the Company had previously been
a member.
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5.12 FINANCIAL CONDITION.
(a) The Company has furnished the Purchasers with true and complete
copies of (i) (A) the audited consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of December 31, 1997, December 31, 1998 and
December 31, 1999 and the related consolidated and consolidating statements of
income, cash flow and stockholders' equity, together with the notes thereto, of
the Company for the years then ended, together with the report of Deloitte &
Touche LLP thereon, and (B) audited statements of purchased operating assets,
liabilities and net operating assets of Tech-Sym as of December 31, 1997,
December 31, 1998 and December 31, 1999 and related statements of operations and
cash flow, together with the notes thereto, of Tech-Sym for the years then
ended, together with the report of Price WaterhouseCoopers, LLC, thereon (the
"AUDITED FINANCIAL STATEMENTS"), and (ii) (A) the unaudited consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of July 31,
2000 and the related consolidated and consolidating statements of income, cash
flow and stockholders' equity, together with the notes thereto, of the Company
and its Subsidiaries for the seven (7) month period then ended, and (B)
unaudited statements of purchased operating assets, liabilities and net
operating assets of Tech-Sym as of July 31, 2000 and related statements of
operations and cash flow, together with the notes thereto, of Tech-Sym for the
seven (7) month period then ended (the "2000 FINANCIAL STATEMENTS"). The Audited
Financial Statements and the 2000 Financial Statements fairly present, in all
material respects, the financial position of the Company and Tech-Sym as of the
respective dates thereof, and the results of operations and cash flows of the
Company and Tech-Sym as of the respective dates or for the respective periods
set forth therein, all in conformity with GAAP consistently applied during the
periods involved, except as otherwise set forth in the notes thereto and
subject, in the case of the 2000 Financial Statements, to normal year-end audit
adjustments.
(b) The Pro Forma Balance Sheet delivered to the Purchasers sets forth
the assets and liabilities of the Company and each of its Subsidiaries on a pro
forma consolidated basis after taking into account the consummation of the
transactions contemplated in this Agreement as of the Closing Date, the
Acquisition and the Spin-Offs. The Pro Forma Balance Sheet has been prepared by
the Company in accordance with GAAP, consistently applied, and fairly presents
in all material respects the assets and liabilities of the Company and its
Subsidiaries on a consolidated basis, reflecting the consummation of the
transactions contemplated in this Agreement and the Acquisition and based on the
assumptions set forth therein as of the Closing Date.
(c) The projections of the Company and its Subsidiaries on a
consolidated basis heretofore delivered to the Purchasers (i) were prepared by
the Company and its Subsidiaries in the ordinary course of their operations
consistent with past practice, (ii) are the most current projections prepared
relating to the periods covered thereby, and (iii) to the knowledge of the
Company, are based on assumptions which were reasonable when made and such
assumptions and projections are reasonable on the date hereof. Neither the
Company not any of its Subsidiaries has delivered to any Person any later dated
projections.
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5.13 DISCLOSURE.
(a) AGREEMENT AND OTHER DOCUMENTS. This Agreement, together with all
exhibits and schedules hereto, and the agreements, certificates and other
documents furnished to the Purchasers by the Company and its Subsidiaries at the
Closing, do not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which they were made, not
misleading.
(b) MATERIAL ADVERSE EFFECTS. There is no fact known to the Company that
the Company has not disclosed to the Purchasers in writing that materially
adversely affects or, insofar as the Company, can reasonably foresee, could
materially adversely affect, the Condition of the Company or the ability of the
Company or any of its Subsidiaries to perform its obligations under the
Transaction Documents, or any agreement or other document contemplated thereby
to which it is a party.
5.14 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999,
except as set forth on SCHEDULE 5.14, neither the Company nor any of its
Subsidiaries has (i) issued any stock, bonds or other corporate securities, (ii)
borrowed any amount or incurred any liabilities (absolute or contingent), other
than in the ordinary course of business, in excess of $10,000, (iii) discharged
or satisfied any Lien or incurred or paid any obligation or liability (absolute
or contingent), other than in the ordinary course of business, in excess of
$10,000, (iv) declared or made any payment or distribution to stockholders or
purchased or redeemed any shares of its capital stock or other securities, (v)
mortgaged, pledged or subjected to Lien any of its assets, tangible or
intangible, (vi) sold, assigned or transferred any of its tangible assets, or
canceled any debts or claims, (vii) sold, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets,
(viii) suffered any losses of property, or waived any rights of substantial
value, (ix) suffered any adverse change in the Condition of the Company or its
Subsidiaries, (x) expended any material amount, granted any bonuses or
extraordinary salary increases, (xi) entered into any transaction involving
consideration in excess of $50,000 except as otherwise contemplated hereby or
(xii) entered into any agreement or transaction, or amended or terminated any
agreement, with an Affiliate. To the knowledge of the Company, no adverse change
in the Condition of the Company or its Subsidiaries is threatened or reasonably
likely to occur.
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5.15 ENVIRONMENTAL MATTERS. Except as described on SCHEDULE 5.15:
(a) The property, assets and operations of the Company and its
Subsidiaries are and have been in compliance with all applicable Environmental
Laws, except where non-compliance, individually or in the aggregate, would not
have a material adverse effect on the Condition of the Company; there are no
Hazardous Materials stored or otherwise located in, on or under any of the
property or assets of the Company or its Subsidiaries, including, without
limitation, the groundwater, except in compliance with applicable Environmental
Laws, except where non-compliance, individually or in the aggregate, would not
have a material adverse effect on the Condition of the Company; and there have
been no releases or threatened releases of Hazardous Materials in, on or under
any property adjoining any of the property or assets of the Company or its
Subsidiaries which have not been remediated to the satisfaction of the
appropriate Governmental Authorities and in compliance with Environmental Laws
except where the failure to so remediate, individually or in the aggregate,
would not have a material adverse effect on the Condition of the Company.
(b) To the knowledge of the Company, none of the property, assets or
operations of the Company or its Subsidiaries is the subject of any Federal,
state or local investigation evaluating whether (i) any remedial action is
needed to respond to a release or threatened release of any Hazardous Materials
into the environment or (ii) any release or threatened release of any Hazardous
Materials into the environment is in contravention of any Environmental Law.
(c) Neither the Company nor any of its Subsidiaries has received any
notice or claim, nor are there pending, or to the knowledge of the Company,
threatened or reasonably anticipated, lawsuits or proceedings against any of
them, with respect to violations of an Environmental Law or in connection with
the presence of or exposure to any Hazardous Materials in the environment or any
release or threatened release of any Hazardous Materials into the environment,
and neither the Company nor its Subsidiaries is or, to the knowledge of the
Company, was the owner or operator of any property which (i) pursuant to any
Environmental Law has been placed on any list of Hazardous Materials disposal
sites, including, without limitation, the "NATIONAL PRIORITIES LIST," (ii) has,
or, to the knowledge of the Company, had, any subsurface storage tanks located
thereon, or (iii) has ever been used as or for a waste disposal facility, a
mine, a gasoline service station or, other than for petroleum substances stored
in the ordinary course of business, a petroleum products storage facility.
(d) Neither the Company nor any of its Subsidiaries has any present or
contingent liability in connection with the presence either on or off the
property or assets of the Company or its Subsidiaries of any Hazardous Materials
in the environment or any release or threatened release of any Hazardous
Materials into the environment, which liability, would have a material adverse
effect on the Condition of the Company.
5.16 INVESTMENT COMPANY/GOVERNMENT REGULATIONS. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. The Company is not subject to regulation under the Public Utility
Holding Company Act of 1935, as amended, the Federal Power Act, the Interstate
Commerce Act, or any federal or state statute or regulation limiting its ability
to incur Indebtedness.
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5.17 SUBSIDIARIES.
(a) SCHEDULE 5.17 sets forth a complete and accurate list of all of the
Subsidiaries of the Company together with their respective jurisdictions of
incorporation or organization. The term "Subsidiaries" shall include Tech-Sym
and each of its Subsidiaries other than TRAK and its Subsidiaries and CrossLink,
for all purposes of this Agreement. All of the outstanding shares of capital
stock of the Subsidiaries that are corporations are validly issued, fully paid
and nonassessable. Except as set forth on SCHEDULE 5.17, as of the Closing Date
after giving effect to the Acquisition, all of the outstanding shares of capital
stock of, or other ownership interests in, each of the Subsidiaries are or will
be owned by the Company or by a wholly owned Subsidiary of the Company, free and
clear of any Liens. No Subsidiary has, or as of the Closing will have,
outstanding options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating the Subsidiary to
issue, transfer or sell any securities of the Subsidiary.
(b) Except for the Subsidiaries of the Company, the Company does not
own of record or beneficially, directly or indirectly, (i) any shares of
outstanding capital stock or securities convertible into capital stock of any
other corporation, and (ii) any equity, voting or participating interest in any
limited liability company, partnership, joint venture or other non-corporate
business enterprises.
5.18 CAPITALIZATION.
(a) As of the Closing Date, the authorized capital stock of the Company
consists of 100,000 shares of Common Stock, of which 50,000 shares are issued
and outstanding. The Company has no shares of capital stock held in treasury. As
of the Closing Date, after giving effect to the transactions contemplated hereby
and in the other Transaction Documents, there will be: (i) 68,292 shares of
Common Stock issued and outstanding and (ii) 8874 shares of Common Stock
reserved for issuance upon exercise of the 1999 Warrant and the Warrants. The
1999 Warrant and the Warrants and all outstanding shares of capital stock of the
Company have been duly authorized by all necessary corporate action. All
outstanding shares of capital stock of the Company are, and the shares of Common
Stock issuable upon exercise of the 0000 Xxxxxxx and the Warrants when issued,
will be, validly issued, fully paid and nonassessable and the issuance of
foregoing has not been or will not be, as the case may be, subject to preemptive
rights in favor of any Person. SCHEDULE 5.18 provides an accurate list as of the
Closing Date, after giving effect to the transactions contemplated hereby and
the other Transaction Documents of (A) all stockholders owning the issued and
outstanding shares of Common Stock, together with the number held by each and
(B) all of the holders of warrants, options, rights and securities convertible
into capital stock, together with the number of shares of capital stock to be
issued upon the exercise or conversion of such warrants, options, rights and
convertible securities.
(b) On the Closing Date, except for the 0000 Xxxxxxx and the Warrants
and as otherwise set forth on SCHEDULE 5.18, there will be no outstanding
securities convertible into or exchangeable for capital stock of the Company or
any of its Subsidiaries or options, warrants or other rights to purchase or
subscribe to capital stock of the Company or any of its Subsidiaries or
contracts, commitments, agreements, understandings or arrangements of any kind
to which the
29
Company or any of its Subsidiaries is a party relating to the issuance of any
capital stock of the Company or any of its Subsidiaries, any such convertible or
exchangeable securities or any such options, warrants or rights.
5.19 PRIVATE OFFERING. No form of general solicitation or general
advertising was used by the Company or any of its Subsidiaries, or their
respective representatives in connection with the offer or sale of the
Securities. No registration of the Securities or Common Stock issuable upon the
exercise of the 1999 Warrant or the Warrants pursuant to the provisions of the
Securities Act or the state securities or "blue sky" laws will be required by
the offer, sale or issuance of the Securities pursuant to this Agreement or of
the Common Stock issuable upon the exercise of the Warrants. The Company agrees
that neither it, nor anyone acting on its behalf, will offer or sell the
Securities or any other security so as to require the registration of the
Securities or Common Stock issuable upon the exercise of the Warrants pursuant
to the provisions of the Securities Act or any state securities or "blue sky"
laws, unless such Securities or Common Stock issuable upon the exercise of the
Warrants are so registered.
5.20 BROKER'S, FINDER'S OR SIMILAR FEES. Except as provided in Section 2.3
or elsewhere in this Agreement or in any of the Transaction Documents or as set
forth on SCHEDULE 5.20 there are no brokerage commissions, finder's fees or
similar fees or commissions payable in connection with the transactions
contemplated by this Agreement (including the transactions contemplated pursuant
to the Senior Loan Agreements and the Acquisition Agreements) based on any
agreement, arrangement or understanding with the Company or any of its
Subsidiaries, or any action taken by any such entity.
5.21 LABOR RELATIONS. Except as set forth on Schedule 5.21, neither the
Company nor any of its Subsidiaries has committed or is engaged in any unfair
labor practice within the meaning of the National Labor Relations Act or the
Railway Labor Act. Except as set forth in SCHEDULE 5.21, there is (a) no unfair
labor practice complaint pending, or to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries before the National Labor
Relations Board and no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is so pending, or to the knowledge of the
Company, threatened, (b) no strike, labor dispute, slowdown or stoppage pending,
or to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries, (c) no union representation question existing with respect to the
employees of the Company or any of its Subsidiaries and no union organizing
activities are taking place, and (d) no employment contract with any employee or
independent contractor of the Company or any Subsidiary. The Company and each
Subsidiary is in compliance with all federal, state or other applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where any such noncompliance,
individually or in the aggregate, would not have a material adverse effect on
the Condition of the Company. Except for the Collective Bargaining Agreement
between PEI and International Union, United Automobile, Aerospace and
Agricultural Workers of America (UAW) covering the period from May 1, 2000 to
May 3, 2003, neither the Company, nor any of its Subsidiaries, is a party to any
collective bargaining agreement.
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5.22 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE BENEFIT PLANS AND LIABILITIES. Neither the Company nor any
of its Subsidiaries nor any ERISA Affiliate has any actual or contingent, direct
or indirect, liability in excess of $10,000 in respect of any employee benefit
plan (as defined in Section 3(3) of ERISA) or other employee benefit arrangement
(collectively, the "PLANS"), other than those liabilities with respect to such
Plans specifically described on SCHEDULE 5.22(a). SCHEDULE 5.22(b) sets forth
all Plans. Neither the Company or any of its Subsidiaries nor any ERISA
Affiliate participates in or contributes to any Multiemployer Plan, nor has (x)
the Company or any ERISA Affiliate other than PEI and its Subsidiaries, or (y)
during the period from January 10, 1997 to the date hereof, PEI and its
Subsidiaries or any of their ERISA Affiliates, had an obligation to participate
in or contribute to any such Multiemployer Plan. There are no actions, suits or
claims, other than for benefits in the ordinary course, pending or, to the
knowledge of the Company, threatened against the Company, an ERISA Affiliate or
the Plans which might subject the Company, or any ERISA Affiliate to any
material liability.
(b) PLAN COMPLIANCE. No civil or criminal action brought pursuant to
the provisions of Title I, Subtitle B, Part 5 of ERISA or any other federal or
state law is pending or threatened against any fiduciary of the Plans. No Plan,
or any fiduciary thereof, has been, or is currently, the direct or indirect
subject of an audit, investigation or examination by the Internal Revenue
Service, the United States Department of Labor or the Pension Benefit Guaranty
Corporation. All of the Plans comply currently and have complied since January
10, 1997, both as to form and operation, in all material respects, with their
terms and with all Requirements of Law. Each of the Plans maintained by the
Company or any Subsidiary that is an "employee benefit pension plan" (within the
meaning of Section 3(2)(A) of ERISA) has obtained a favorable determination
(covering all changes or amendments applicable under Requirements of Law) from
the Internal Revenue Service as to its qualification under Sections 401(a) and
501(a) of the Code or is within the remedial amendment period (as provided in
Section 401(b) of the Code) for making any required changes or amendments, and
nothing has occurred that would adversely affect such qualification. All amounts
that are currently owing to plan participants, or contributions required to be
made to the Plans have been timely paid or contributed with respect to all
periods prior to the Closing Date.
(c) PROHIBITED TRANSACTIONS. Except as set forth on SCHEDULE 5.22(c),
no Plan, nor any related trust, nor the Company, nor any Subsidiary thereof, nor
any trustee, administrator or other "party in interest" or "disqualified person"
(within the meaning of Section 3(14) of ERISA or Section 4975(e)(2) of the Code,
respectively) with respect to the Plans, has engaged in any nonexempt
"prohibited transaction" (within the meaning of Section 406 of ERISA or Section
4975(c) of the Code, respectively) with respect to the participation of Company
or any of its Subsidiaries therein, which could subject any of the Plans or
related trusts, or any trustee, administrator or other fiduciary of any such
Plan, or the Company, any Subsidiary of the Company or the Purchasers, or any
other party dealing with the Plans, to the penalties or excise tax imposed on
prohibited transactions by Section 502 of ERISA or Section 4975 of the Code
which could have a material adverse effect on the Condition of the Company.
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(d) COBRA. Except as set for in SCHEDULE 5.22(d), the Company and each
of its Subsidiaries has materially complied with the continuation coverage
requirements of group health plans provided in Section 4980B of the Code,
Sections 601 et seq. of ERISA, the Family and Medical Leave Act of 1994, and the
regulations promulgated thereunder.
(e) MISCELLANEOUS. Neither the Company, its Subsidiaries, nor any Plan
provides for or promises retiree, medical, disability or life insurance benefits
to any current or former employee, officer or director of the Company or any of
its Subsidiaries, other than continuation coverage required by section 4980B of
the Code. Neither the Company nor any of its Subsidiaries is a party to or
obligated under any agreement, plan, contract or other arrangements that will
result, separately or in the aggregate, in the payment of any "excess parachute
payment" within the meaning of section 280G of the Code.
5.23 PATENTS, TRADEMARKS, ETC. SCHEDULE 5.23 sets forth a correct and
complete list of (i) all patents, trademarks, trade names, service marks,
copyright registrations, and applications therefor now used, or presently
proposed to be used in the business of the Company and the Subsidiaries, and
(ii) a complete list of licenses or other contracts relating to the Company's or
any Subsidiary's rights relating to the foregoing or any registration thereof.
Except as disclosed on SCHEDULE 5.23; (i) each of the Company or the
Subsidiaries owns or possesses adequate licenses or other valid rights to use
(without the making of any payment to others or the obligation to grant rights
to others in exchange) all patents, trademarks, trade names, service marks,
copyright registrations, know-how and other proprietary information
("INTELLECTUAL PROPERTIES") necessary to the conduct of its business as
presently being or proposed to be conducted, except where the failure to have
such licenses or rights would not singly or in the aggregate have a material
adverse effect on the condition of the Company, (ii) the validity of the
Intellectual Properties and the title thereto of the Company or the
Subsidiaries, as the case may be, is not being questioned in any claim to which
the Company or the Subsidiaries is a party or subject, nor, to the knowledge of
the Company, is any such claim threatened; (iii) to the knowledge of the
Company, the conduct of the business of each of the Company and the Subsidiaries
as now conducted does not and will not infringe or conflict with any
Intellectual Properties of others; (iv) to the knowledge of the Company, there
is no use of any Intellectual Properties owned by or licensed to the Company or
the Subsidiaries that is now being made, except by the Company or the
Subsidiaries or by any person duly licensed by the Company or the Subsidiaries
to use the same name; and (v) no infringement by others of any Intellectual
Properties owned by or licensed by or to the Company or the Subsidiaries is
known to the Company. Except as set forth as SCHEDULE 5.23, all patents, patent
applications, rights to inventions and other Intellectual Properties owned or
held by any employee of the Company or any Subsidiary and used in the business
of the Company or any Subsidiary in any manner have been duly and effectively
transferred to the Company or a Subsidiary, except for such Intellectual
Properties which, individually or in the aggregate, are not material to the
business of the Company and its Subsidiaries. Except as set forth on SCHEDULE
5.23, neither the Company nor any of its Subsidiaries has any obligation to
compensate any Person for the use of any Intellectual Properties and neither the
Company nor any of its Subsidiaries has granted any license or other right to
use any of the Intellectual Properties of the Company or it Subsidiaries,
whether requiring the payment of royalties or not. The Company and its
Subsidiaries have taken all reasonable measures to protect and preserve the
security, confidentiality and value of their Intellectual Properties, including
trade secrets and other confidential information. All trade secrets and other
confidential information of the Company and its Subsidiaries are not part
32
of the public domain, nor to the Company's knowledge have they been used,
divulged or appropriated for the benefit of any Person other than the Company or
its Subsidiaries or otherwise to the detriment of the Company or its
Subsidiaries. No employee or consultant of the Company or its Subsidiaries has
used any trade secrets or other confidential information of any other Person in
the course of his work for the Company or its Subsidiaries. No patent,
invention, device, principle or any statute, law, rule, regulation, standard or
code is pending or proposed which would restrict the Company's or any
Subsidiary's ability to use any of the Intellectual Properties.
5.24 POTENTIAL CONFLICTS OF INTEREST. Except as set forth on SCHEDULE 5.24,
no officer, director, stockholder or other security holder of the Company or any
of its Subsidiaries: (a) owns, directly or indirectly, any interest in
(excepting less than 5% stock holdings for investment purposes in securities of
publicly held and traded companies), or is an officer, director, employee or
consultant of, any Person that is, or is engaged in business as, a competitor,
lessor, lessee, supplier, distributor, sales agent or customer of, or lender to
or borrower from, the Company or any of its Subsidiaries; (b) owns, directly or
indirectly, in whole or in part, any tangible or intangible property that the
Company or any of its Subsidiaries uses in the conduct of business; or (c) has
any cause of action or other claim whatsoever against, or owes or has advanced
any amount to, the Company or any of its Subsidiaries, except for claims in the
ordinary course of business such as for accrued vacation pay, accrued benefits
under employee benefit plans, and similar matters and agreements existing on the
date hereof.
5.25 OUTSTANDING BORROWINGS. Except for Outstanding Borrowings under the
Senior Loan Agreements, SCHEDULE 5.25 lists (i) the amount of all Outstanding
Borrowings of the Company and its Subsidiaries (other than Indebtedness under
this Agreement) as of the closing of the transactions contemplated hereby, (ii)
the Liens that relate to such Outstanding Borrowings and that encumber the
assets of the Company and its Subsidiaries, (iii) the name of each lender
thereof, and (iv) the amount of any unfunded commitments available to the
Company or any Subsidiary in connection with any Outstanding Borrowings.
5.26 MATERIAL CONTRACTS. SCHEDULE 5.26 lists all contracts, agreements and
commitments of the Company and its Subsidiaries as of the Closing Date, whether
written or oral, other than (a) the Transaction Documents, (b) purchase orders
in the ordinary course of business, and (c) any other contracts, agreements and
commitments of the Company or any Subsidiary that do not extend beyond one year
and involve the receipt or payment of not more than $50,000. To the knowledge of
the Company, each of the contracts, agreements and commitments of the Company
and its Subsidiaries required to be set forth on SCHEDULE 5.26 is in full force
and effect.
5.27 INSURANCE. SCHEDULE 5.27 accurately summarizes all of the insurance
policies or programs of the Company and each Subsidiary in effect as of the date
hereof, and indicates the insurer's name and policy number. All such policies
are in full force and effect, are underwritten by financially sound and
reputable insurers, are sufficient for all applicable Requirements of Law and
otherwise are in compliance with the criteria set forth in Section 8.8 hereof.
All such policies will remain in full force and effect and will not in any way
be affected by, or terminate or lapse by reason of any of the transactions
contemplated hereby.
33
5.28 PRODUCTS LIABILITY. Except as set forth on SCHEDULE 5.28, there is no
action, suit, proceeding or to the knowledge of the Company, any inquiry or
investigation pending, by or before any Governmental Authority against the
Company or any of the Subsidiaries relating to any product alleged to have been
sold by the Company or any of the Subsidiaries and alleged to have been sold by
the Company or any of the Subsidiaries and alleged to have been defective, or
improperly designed or manufactured, nor to the knowledge of the Company is
there any valid basis for any such action, proceeding or investigation.
5.29 SOLVENCY. The Company and its Subsidiaries, taken as a whole, are
Solvent.
5.30 OTHER DOCUMENTS. The Company has delivered or made available to the
Purchaser true, complete and correct copies of all agreements, schedules,
exhibits, certificates, financial information, filings and other documents
relating to the Company and its Subsidiaries, and all amendments and
modifications thereto listed or referred to herein or the schedules hereto. Such
documents comprise a full and complete copy of all agreements and understandings
between the parties thereto with respect to the subject matter thereof and all
transactions related thereto, and there are no agreements or understandings,
oral or written, or side agreements not contained therein that relate to or
modify the substance thereof. Each of such documents to which it is a party has
been duly authorized by all necessary corporate action on the part of the
Company and its Subsidiaries, was validly executed and delivered by the Company
and its Subsidiaries and is the legal, valid and binding obligation of the
Company and its Subsidiaries and their successors, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting creditors'
rights generally and by general principles of equity relating to enforceability.
Each of such documents is in full force and effect, and none of their provisions
have been waived by any party thereto.
5.31 LOCATION OF ASSETS. The chief executive offices of the Company and its
Subsidiaries and the books and records of the Company and its Subsidiaries
concerning its accounts (as such term is defined in the Uniform Commercial Code)
are located only at the address set forth on SCHEDULE 5.31 identified as such,
and the only other places of business and locations of assets of the Company and
its subsidiaries, if any, are the addresses set forth on SCHEDULE 5.31.
5.32 ACQUISITION AGREEMENTS REPRESENTATIONS AND WARRANTIES. To the
knowledge of the Company, the representations and warranties made in the
Acquisition Agreements by the parties thereto are true, correct and accurate.
Copies of the Acquisition Agreements and Senior Loan Agreements (and each
document referenced in those agreements) have been provided to the Purchasers,
and such copies are true, correct and complete.
5.33 GOVERNMENT CONTRACTS. No notice of suspension, debarment, cure notice,
show cause notice or notice of termination for default has been received by the
Company or any Subsidiary (or to the best knowledge of the Company issued) in
connection with any Government Contract, or any other Significant Customer
Contract, and neither the Company nor any Subsidiary is a party to any pending
(and, to the Company's knowledge, there is no threatened) suspension, debarment
or termination for default issued or being pursued or any other adverse action
or proceeding in connection with any Government Contract or Significant Customer
Contract. All Government
34
Contracts or other Significant Customer Contracts which have a remaining value
in excess of One Million Dollars ($1,000,000) are listed on SCHEDULE 5.33
hereto.
5.34 BURDENSOME RESTRICTIONS. None of the Company or any of its
Subsidiaries is a party to any agreement or instrument or subject to any other
obligation or any charter or corporate restriction or any provision of any
applicable law, rule or regulation which, individually or in the aggregate,
could reasonably be expected to have a material adverse effect on the Condition
of the Company.
5.35 OTHER DOCUMENTS. As of the Closing Date, the Acquisition Agreements
have not been altered, amended or otherwise modified or supplemented or any
condition thereof waived. On the Closing Date, each of the representations and
warranties made in the Senior Loan Agreements by the Company is true and correct
in all material respects except for representations and warranties that relate
to a particular date and, with regard to such representations and warranties,
the same were true and correct as of such date.
ARTICLE VI
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Each Purchaser hereby severally but not jointly represents and
warrants:
6.1 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by it of this Agreement: (a) is within its power and authority and
has been duly authorized by all necessary action; (b) does not contravene the
terms of its organizational documents or any amendment thereof; and (c) will not
violate, conflict with or result in any breach or contravention of any of its
Contractual Obligations, or any order or decree directly relating to it.
6.2 BINDING EFFECT. This Agreement has been duly executed and delivered by
it and this Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
6.3 NO LEGAL BAR. The execution, delivery and performance of this Agreement
by it will not violate any Requirement of Law applicable to it.
6.4 PURCHASE FOR OWN ACCOUNT. The Securities to be acquired by it pursuant
to this Agreement are being or will be acquired for its own account and with no
intention of distributing or reselling such securities or any part thereof in
any transaction that would be in violation of the securities laws of the United
States of America, or any state, without prejudice, however, to its right at all
times to sell or otherwise dispose of all or any part of its Notes or Warrants,
under an effective registration statement under the Securities Act, or under an
exemption from such registration available under the Securities Act, and
subject, nevertheless, to (i) the pledge by WMF of the Securities pursuant to
the terms of the partnership agreement or other agreement of WMF pursuant
35
to which WMF issued any indebtedness and (ii) the disposition of its property
being at all times within its control. If a Purchaser should in the future
decide to dispose of any of the Securities, each Purchaser understands and
agrees that it may do so only in compliance with the Securities Act and
applicable state securities laws, as then in effect. It agrees to the imprinting
of a legend on certificates representing all of the Securities to the following
effect: "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS."
6.5 ERISA. No part of the funds used by it to purchase the Securities
hereunder constitutes assets of any "employee benefit plan" (as defined in
Section 3(3) of ERISA) or "plan" (as defined in Section 4975 of the Code) listed
on SCHEDULE 5.22(b).
6.6 BROKER'S, FINDER'S OR SIMILAR FEES. Except as set forth in Section 2.3
hereof, there are no brokerage commissions, finder's fees or similar fees or
commissions payable in connection with the transactions contemplated hereby
based on any agreement, arrangement or understanding with it or any action taken
by it.
6.7 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENT. No approval, consent,
compliance, exemption, authorization, or other action by, or notice to, or
filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by it or enforcement against it of this Agreement or the
transactions contemplated hereby.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION. In addition to all other sums due hereunder or
provided for in this Agreement, the Company agrees to indemnify and hold
harmless each of the Purchasers and their respective Affiliates and each of
their respective officers, directors, agents, employees, subsidiaries, partners,
attorneys, accountants and controlling persons (each, an "INDEMNIFIED PARTY") to
the fullest extent permitted by law from and against any and all losses, claims,
damages, expenses (including, without limitation, reasonable fees, disbursements
and other charges of counsel incurred by an Indemnified Party in any action or
proceeding between the Company and such Indemnified Party (or Indemnified
Parties), or between an Indemnified Party (or Indemnified Parties) and any third
party or otherwise) or other liabilities, losses, or diminution in value
(collectively, "LIABILITIES") resulting from or arising out of any breach of any
representation or warranty, covenant or agreement of the Company in this
Agreement, the Registration Rights Agreement, the Stockholders' Agreement, the
Notes, the Warrants, or the other Transaction Documents, including without
limitation, the failure to make payment when due of amounts owing pursuant to
this Agreement, the Notes or the other Transaction Documents, on the due date
thereof (whether at the scheduled maturity, by acceleration
36
or otherwise) or any legal, administrative or other actions (including, without
limitation, actions brought by a Purchaser, the Company, any of its Subsidiaries
or any equity holders of the Company or any of its Subsidiaries or derivative
actions brought by any Person claiming through or in the Company's or any
Subsidiary's name), proceedings or investigations (whether formal or informal),
or written threats thereof, based upon, relating to or arising out of the
Transaction Documents, the transactions contemplated thereby, or any Indemnified
Party's role therein or in the transactions contemplated thereby; PROVIDED,
HOWEVER, that the Company shall not be liable under this Section 7.1 to an
Indemnified Party: (a) for any amount paid by the Indemnified Party in
settlement of claims by the Indemnified Party without the Company's consent
(which consent shall not be unreasonably withheld), (b) to the extent that it is
finally judicially determined that such Liabilities resulted primarily from the
willful misconduct or gross negligence of such Indemnified Party or (c) to the
extent that it is finally judicially determined that such Liabilities resulted
primarily from the breach by such Indemnified Party of any representation,
warranty, covenant or other agreement of such Indemnified Party contained in
this Agreement; PROVIDED, FURTHER, that if and to the extent that such
indemnification is unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such Liabilities which
shall be permissible under applicable laws. In connection with the obligation of
the Company to indemnify for expenses as set forth above, the Company further
agrees, upon presentation of appropriate invoices containing reasonable detail,
to reimburse each Indemnified Party for all such expenses (including, without
limitation, fees, disbursements and other charges of counsel incurred by an
Indemnified Party in any action or proceeding between the Company, and such
Indemnified Party (or Indemnified Parties), or between an Indemnified Party (or
Indemnified Parties) and any third party or otherwise) as they are incurred by
such Indemnified Party; PROVIDED, HOWEVER, that if an Indemnified Party is
reimbursed hereunder for any expenses, such reimbursement of expenses shall be
refunded to the extent it is finally judicially determined that the Liabilities
in question resulted primarily from (i) the willful misconduct or gross
negligence of such Indemnified Party or (ii) the breach by such Indemnified
Party of any representation, warranty, covenant or other agreement of such
Indemnified Party contained in this Agreement or any other Transaction Document.
7.2 PROCEDURE; NOTIFICATION. Each Indemnified Party under this Article 7
will, promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Company under this Article 7,
notify the Company in writing of the commencement thereof. The omission of any
Indemnified Party so to notify the Company of any such action shall not relieve
the Company from any liability which it may have to such Indemnified Party
unless, and only to the extent that, such omission results in the Company's
forfeiture of substantive rights or defenses. In case any such action, claim or
other proceeding shall be brought against any Indemnified Party and it shall
notify the Company of the commencement thereof, the Company shall be entitled to
assume the defense thereof at its own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; PROVIDED, HOWEVER, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action, claim
or proceeding in which the Company and an Indemnified Party are, or are
reasonably likely to become, parties, such Indemnified Party shall have the
right to employ separate counsel at the Company's expense and to control its own
defense of such action, claim or proceeding if, in the reasonable opinion of
counsel to such Indemnified Party, a conflict or potential conflict exists
between the Company, on the one hand, and such Indemnified Party, on the other
hand, that would
37
make such separate representation advisable; PROVIDED, HOWEVER, that in no event
shall the Company be required to pay fees and expenses under this Article 7 for
more than one firm of attorneys in any jurisdiction in any one legal action or
group of related legal actions. The Company agrees that it will not, without the
prior written consent of the Purchasers, settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated hereby (if any Indemnified Party is a party
thereto or has been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of the
Purchasers and each other Indemnified Party from all liability arising or that
may arise out of such claim, action or proceeding. The Company shall not be
liable for any settlement of any claim, action or proceeding effected against an
Indemnified Party without its written consent, which consent shall not be
unreasonably withheld. The rights accorded to Indemnified Parties hereunder
shall be in addition to any rights that any Indemnified Party may have at common
law, by separate agreement or otherwise.
7.3 REGISTRATION RIGHTS AGREEMENT. Notwithstanding anything to the contrary
in this Article 7, the indemnification and contribution provisions of the
Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the payment by the Company of all principal of and interest on
the Notes and all other amounts due to the Purchasers under this Agreement and
the other Transaction Documents, including, without limitation, all fees,
expenses and amounts due in respect of indemnity obligations under Article 7,
the Company hereby covenants and agrees with the Purchasers as follows:
8.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall maintain,
and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP (it being
understood that monthly financial statements are not required to have footnote
disclosures). The Company shall deliver to the Purchasers each of the financial
statements and other reports described below:
(a) MONTHLY AND QUARTERLY FINANCIAL INFORMATION. As soon as available
and in any event within forty-five (45) days after the end of each month during
the period from the date hereof through and until March 31, 2001, and thirty
(30) days after the end of each month after April 1, 2001, the Company shall
deliver (i) the consolidated and consolidating balance sheets of the Company and
its Subsidiaries, as at the end of such month and the related consolidated and
consolidating statements of income, stockholders' equity and cash flow for such
month and for the period from the beginning of the then current fiscal year of
the Company to the end of such month (and, with respect to financial statements
delivered for months that are also the last month of any fiscal quarter,
accompanied by the related consolidated and consolidating statements of income,
stockholders' equity and cash flow for such fiscal quarter) and (ii) a schedule
of the outstanding Indebtedness for borrowed money of the Company and its
Subsidiaries describing in reasonable
38
detail each such debt issue or loan outstanding and the principal amount and
amount of accrued and unpaid interest with respect to each such debt issue or
loan.
(b) YEAR-END FINANCIAL INFORMATION. As soon as available and in any
event within ninety (90) days after the end of the fiscal year of the Company,
the Company shall deliver (i) the consolidated and consolidating balance sheets
of the Company and its Subsidiaries as at the end of such year and the related
consolidated and consolidating statements of income, stockholders' equity and
cash flow for such fiscal year, (ii) a schedule of the outstanding Indebtedness
for borrowed money of the Company and its Subsidiaries describing in reasonable
detail each such debt issue or loan outstanding and the principal amount and
amount of accrued and unpaid interest with respect to each such debt issue or
loan, and (iii) a report with respect to the financial statements from a "Big
Five" firm of certified public accountants selected by the Company and
reasonably acceptable to the Purchasers.
(c) COMPANY'S COMPLIANCE CERTIFICATE. Together with each delivery of
financial statements of the Company and its Subsidiaries pursuant to Sections
8.1(a) and 8.1(b) above, the Company shall deliver or cause to be delivered a
fully and properly completed compliance certificate (in substantially the form
attached hereto as EXHIBIT E (or in such other form or substance as shall be
satisfactory to Purchasers) and referred to as a "COMPLIANCE CERTIFICATE")
signed by the chief executive officer or chief financial of the Company. The
Company and the Purchasers acknowledge and agree that calculations of covenant
compliance, with respect to the financial covenants contained in Section 9.8
hereof and contained in any such compliance certificate delivered for a month
that is not the last month of a calendar quarter, will be for informational
purposes only and shall not measure compliance (or lack of compliance) with such
financial covenants.
(d) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, the Company
shall deliver copies of all significant reports submitted by the Company's firm
of certified public accountants in connection with each annual, interim or
special audit or review of any type of the financial statements or related
internal control systems of the Company and its Subsidiaries made by such
accountants, including any comment letter submitted by such accountants to
managements in connection with their services.
(e) MANAGEMENT REPORTS. Together with each delivery of financial
statements of the Company and its Subsidiaries pursuant to subsections 8.1(a)
and 8.1(b), the Company will deliver a management report (i) describing the
operations and financial condition of the Company and its Subsidiaries for the
month then ended and the portion of the current fiscal year then elapsed (or for
the fiscal year then ended in the case of year-end financials), (ii) setting
forth in comparative form the corresponding figures for the corresponding
periods of the previous fiscal year and the corresponding figures from the most
recent projections for the current fiscal year delivered pursuant to subsection
8.1(f) and (iii) discussing the reasons for any significant variations. The
information above shall be presented in reasonable detail and shall be certified
by the chief financial officer of the Company to the effect that such
information fairly presents the results of operations and financial condition of
the Company and its Subsidiaries as at the dates and for the periods indicated.
(f) PROJECTIONS. No earlier than sixty (60) days prior nor later than
thirty (30) days prior to the end of each fiscal year beginning with the current
fiscal year, the Company shall prepare
39
and deliver to the Purchasers projections of the Company and its Subsidiaries
for the next succeeding fiscal year, on a month to month basis and for the
following two (2) fiscal years on an annual basis, including, a balance sheet as
of the end of each relevant period and income statements and statements of cash
flow for each relevant period and for the period commencing at the beginning of
the fiscal year and ending on the last day of each relevant period.
(g) SEC FILINGS AND PRESS RELEASES. Promptly upon their becoming
available, the Company shall deliver copies of (i) all financial statements,
reports, notices and proxy statements sent or made available by the Company or
any of its Subsidiaries to their security holders, (ii) all regular and periodic
reports and all registration statements and prospectuses, if any, filed by the
Company or any of its Subsidiaries with any securities exchange or with the
Commission or any governmental or private regulatory authority, and (iii) all
press releases and other statements made available by the Company or any of its
Subsidiaries to the public concerning material developments in the business the
Company or any of its Subsidiaries.
(h) EVENTS OF DEFAULT, ETC. Promptly upon the Company obtaining
knowledge of any of the following events or conditions, the Company shall
deliver copies of all notices given or received by the Company or any of its
Subsidiaries with respect to any such event or condition and a certificate of
the Company's chief executive officer specifying the nature and period of
existence of such event or condition and what action the Company has taken, is
taking and proposes to take with respect thereto: (i) any condition or event
that constitutes a breach of any provision of this Agreement; (ii) any notice
that any Person has given to the Company or any Subsidiary, or any other action,
taken with respect to a claimed default in any agreement evidencing Indebtedness
or any other material agreement to which the Company or any Subsidiary is a
party; or (iii) any event or condition that could reasonably be expected to
result in any material adverse effect on the Condition of the Company.
(i) LITIGATION. Promptly upon any officer of the Company obtaining
knowledge of (i) the institution of any action, suit, proceeding, governmental
investigation or arbitration against or affecting the Company or any of its
Subsidiaries or any property of the Company or any of its Subsidiaries not
previously disclosed by the Company to the Purchasers or (ii) any material
development in any action, suit, proceeding, governmental investigation or
arbitration at any time pending against or affecting the Company or any of its
Subsidiaries or any property of the Company or any of its Subsidiaries which, in
each case, is reasonably possible to have a material adverse effect on the
Condition of the Company, the Company will promptly give notice thereof to the
Purchasers and provide such other information as may be reasonably available to
them to enable the Purchasers and their respective counsel to evaluate such
matter.
(j) SUBSIDIARIES. Not less than fifteen (15) days prior to creating a
Subsidiary or acquiring the Capital Stock of a Person, such that such Person
will become a Subsidiary, the Company shall notify the Purchasers of the
Company's or any of its Subsidiary's intention to create such Subsidiary or
acquire such Capital Stock, and, upon formation (in the case of a newly created
Subsidiary), or prior to acquisition (in the case of the acquisition of Capital
Stock of an existing Person), the Company shall cause the relevant Subsidiary to
execute the Guaranty in form and substance satisfactory to the Purchasers.
40
(k) NOTICE OF CORPORATE CHANGES. The Company shall provide prompt
written notice to the Purchasers of any material change after the Closing Date
in the authorized and issued capital stock or other equity interests of the
Company or any of its Subsidiaries or any other material amendment to their
charter, by-laws or other organization documents, such notice, in each case, to
identify the capital structures.
(l) NO DEFAULTS. The Company shall deliver to the Purchasers
concurrently with the delivery of the financial statements referred to in
Section 8.1(b), a certificate of the Company's Chief Financial Officer stating
that to his or her knowledge no Event of Default shall have occurred during the
period covered thereby, except as specified in such certificate.
(m) OTHER INFORMATION. With reasonable promptness, the Company shall
deliver such other information and data with respect to the Company or any of
its Subsidiaries as from time to time may be reasonably required by any of the
Purchasers.
8.2 PRESERVATION OF CORPORATE EXISTENCE. Except for the liquidation of the
entities set forth on SCHEDULE 8.2 hereof (the "INACTIVE SUBSIDIARIES"), the
Company shall, and shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence;
(b) conduct its business in accordance with sound business practices,
keep its properties in good working order and condition (normal wear and tear
excepted), and from time to time make all needed repairs to, renewals of or
replacements of its properties (except to the extent that any of such properties
are obsolete or are being replaced) so that the efficiency of its business
operations shall be fully maintained and preserved; and
(c) file or cause to be filed in a timely manner all reports,
applications, estimates and licenses that shall be required by a Governmental
Authority.
8.3 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause each of its
Subsidiaries to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including without limitation:
(a) all Tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which the Company and each of its Subsidiaries
is obligated to pay, which are due and which, if unpaid, might by law become
a Lien upon its property, unless the same are being contested in good faith
by appropriate proceedings and adequate reserves in accordance with GAAP are
being maintained by the Company or such Subsidiary; and
(c) all payments of principal, interest and other amounts when due on
Indebtedness (other than Indebtedness pursuant to the Senior Loan Agreements).
41
8.4 COMPLIANCE WITH LAWS.
(a) The Company shall comply, and shall cause each of its Subsidiaries
to comply, in all material respects with all Requirements of Law and with the
directions of any Governmental Authority having jurisdiction over them or their
business or property (including all applicable Environmental Laws).
(b) Within sixty (60) days after the Closing Date, the Company shall
provide evidence satisfactory to the Purchasers that procedures have been
implemented to evaluate and bring into compliance as required under applicable
Environmental Laws the ongoing compliance recommendations set forth on SCHEDULE
8.4 as identified in those certain Phase I Environmental Site Assessments
prepared by SCS Engineers with respect to the properties owned, leased and/or
operated by the Company and its Subsidiaries located at 000 Xxxxxxx Xxxxxx, Xxxx
Xxxxxx Xxxxx, Xxxxxxx; 000 Xxxx Xxxxxxx, X.X., Xxxx Xxxxxx Xxxxx, Xxxxxxx; 000
Xxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxx; and 0000 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxx, Xxxxx.
8.5 RESERVATION OF SHARES. The Company shall at all times reserve and keep
available out of its authorized capital stock, solely for the purpose of
issuance or delivery upon exercise of the Warrants, the maximum number of shares
of capital stock that may be issuable or deliverable upon such exercise (the
"EXERCISABLE SHARES"). The Exercisable Shares shall, when issued or delivered in
accordance with the Warrants, be duly and validly issued and fully paid and
non-assessable. The Company shall issue such capital stock in accordance with
the provisions of the Warrants and shall otherwise comply with the terms
thereof.
8.6 INSPECTION. The Company will permit, and will cause each of its
Subsidiaries to permit, representatives of the Purchasers to visit and inspect
any of their properties, to examine their corporate, financial and operating
records and make copies thereof or abstracts therefrom, and to discuss their
affairs, finances and accounts with their respective directors, officers and
independent public accountants, all at such reasonable times during normal
business hours and as often as may be reasonably requested, upon reasonable
advance notice; PROVIDED, HOWEVER, that no such inspection, examination or
inquiry, the failure to conduct same, nor any knowledge of the Purchasers,
including, without limitation, any knowledge obtained by the Purchasers in
connection with any such inspection, investigation or inquiry, shall constitute
a waiver of any rights the Purchasers may have under any representation,
warranty, covenant, term or agreement under any of the Transaction Documents.
8.7 PAYMENT OF NOTES. The Company shall pay the principal of, interest on
and other amounts due in respect of, the Notes on the dates and in the manner
provided in the Notes. Without limiting the foregoing, all payments of amounts
due in respect of the Notes shall be made pari passu with respect to all of the
Notes.
8.8 INSURANCE. The Company and its Subsidiaries shall maintain or cause to
be maintained in good repair, working order and condition all material
properties used in their respective businesses and will make or cause to be made
all appropriate repairs, renewals and replacements thereof. The Company and its
Subsidiaries will maintain or cause to be maintained
42
with financially sound and reputable insurers that have a rating of "A" or
better as established by Best's Rating Guide (or an equivalent rating with such
other publication of a similar nature as shall be in current use), public
liability and property damage insurance with respect to their respective
businesses and properties against loss or damage of the kinds customarily
carried or maintained by companies of established reputation engaged in similar
businesses. Without limiting the foregoing, the Company and its Subsidiaries
will maintain at all times (a) business interruption insurance in an amount
satisfactory to WMF and (b) directors' and officers' liability insurance
coverage for each of the members of the Board of Directors of the Company in
amounts satisfactory to WMF; PROVIDED, HOWEVER, that the Company shall not be
obligated to purchase such insurance in the event that reasonable terms and
pricing are not commercially available. All such insurance policies shall
provide that they may not be canceled unless the insurance carrier gives at
least 30 days prior written notice of such cancellation to the Purchasers.
8.9 BOOKS AND RECORDS. The Company shall, and shall cause each of its
Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Company and each of its Subsidiaries in accordance with GAAP
consistently applied to the Company and its Subsidiaries taken as a whole.
8.10 USE OF PROCEEDS. The Company shall use the proceeds of the sale of
Securities hereunder only as follows: (i) for the payment of fees and expenses
in connection with the transactions contemplated hereunder and in the other
Transaction Documents, (ii) for the payment of the amounts set forth in Section
3.16, (iii) for the payment of a portion of the consideration and fees and
expenses under the Acquisition Agreements to consummate the Acquisition, and
(iv) for general corporate purposes.
8.11 BOARD NOMINEES. The Company shall maintain a Board of Directors
consisting of the number of directors specified in the Stockholders' Agreement
and use its best efforts to have the nominees designated pursuant to the
Stockholders' Agreement elected to the Board of Directors in accordance with,
and subject to, the terms thereof.
8.12 SPIN-OFFS. On the Closing Date, contemporaneously with or immediately
after the consummation of the purchase and sale of the Securities pursuant to
this Agreement, the Spin-Offs shall be consummated.
ARTICLE IX
NEGATIVE COVENANTS
Until the payment by the Company of all principal of and interest on
the Notes and all other amounts due at the time of payment of such principal and
interest to the Purchasers under this Agreement and the other Transaction
Documents, including, without limitation, all fees, expenses and amounts due at
such time in respect of indemnity obligations under Article 7, the Company
hereby covenants and agrees with the Purchasers as follows:
9.1 FUNDAMENTAL CHANGES; CONSOLIDATIONS, MERGERS AND ACQUISITIONS. The
Company shall not, and shall not permit any of its Subsidiaries directly or
indirectly to: (a) amend, modify or
43
waive any term or provision of its certificate of incorporation, by-laws or
other organization or governing agreements and documents, unless required by
law; (b) enter into any transaction of merger or consolidation; (c) liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution) except for
the liquidation of the Inactive Subsidiaries; or (d) acquire by purchase or
otherwise all or any substantial part of the business or assets of any other
Person. Notwithstanding the terms of Section 9.1(a) above, the Company or any
Subsidiary may amend its certificate of incorporation at any time in order to
(i) change its name, (ii) change the name and address of its registered office
or registered agent, (iii) subdivide (by stock split or otherwise) or combine
(by reverse stock split or otherwise) the outstanding shares of capital stock
into a greater or lesser number or shares, and (iv) modify the terms and
provisions of any articles respecting the personal liability of directors in
connection with changes in applicable governing statutory and judicial case law.
9.2 TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule 9.13 or
otherwise in the ordinary course of business and consistent with past practices,
the Company shall not, and shall not permit any of its Subsidiaries to, (a)
enter into any transaction or agreement with, or make any payment (other than
pursuant to agreements existing on the date hereof or subsequently approved by
the Purchasers) to, any Affiliate, (b) amend or terminate any existing agreement
with any Affiliate, (c) purchase from or provide to an Affiliate any selling,
general, management or administrative services, (d) directly or indirectly make
any sales to or purchases from an Affiliate or (e) increase the compensation
being paid to an Affiliate.
9.3 NO INCONSISTENT AGREEMENTS. Other than as provided in the Original
Credit Agreement and the Notes, none of the Company nor any of its Subsidiaries
shall enter into any Contractual Obligation or enter into any amendment or other
modification to any currently existing Contractual Obligation of the Company, or
any of its Subsidiaries, which by its terms restricts or prohibits the ability
of the Company or any such Subsidiary, as applicable, to pay the principal of or
interest on the Notes or to fully satisfy all of the obligations under the
Transaction Documents of the Company.
9.4 LIMITATION ON INDEBTEDNESS. The Company shall not, and shall not cause,
suffer or permit any of its Subsidiaries to, directly or indirectly,
collectively and in the aggregate, issue, assume or otherwise incur any
Indebtedness, other than:
(a) Indebtedness created under the Transaction Documents (other than
the Senior Loan Agreements);
(b) Permitted Indebtedness, up to an aggregate outstanding principal
amount of $195,000,000, inclusive of Indebtedness pursuant to the Senior Loan
Agreements, but not inclusive of Indebtedness created under the Transaction
Documents;
(c) Non-current liabilities for post-employment healthcare and other
insurance benefits;
(d) Trade payables and accrued expenses, in each case arising in the
ordinary course of business;
44
(e) Indebtedness secured by a Lien permitted under Section 9.5;
(f) Indebtedness between and/or among the Company and its Subsidiaries;
PROVIDED that the obligations of such Indebtedness shall:
(i) be subordinated in right of payment to all Indebtedness
under the Notes, this Agreement and the other Transaction Document from and
after such time as any portion of the Indebtedness under the Notes, this
Agreement and the other Transaction Documents shall become due and payable
(whether at stated maturity, by acceleration or otherwise); and
(ii) have such other terms and provisions as the Purchasers
may reasonably require;
(g) Refinancings, refundings or extensions of the foregoing; PROVIDED,
that any such refinancings, refundings or extensions shall not exceed the
principal amount permitted under Section 9.4(b) hereof;
(h) Indebtedness of the Company and its Subsidiaries incurred after the
Closing Date consisting of Capital Leases or Indebtedness incurred to provide
all or a portion of the purchase price or costs of construction of an asset
PROVIDED that (i) such Indebtedness when incurred shall not exceed the purchase
price or cost of construction of such asset; (ii) no such Indebtedness shall be
refinanced for a principal amount in excess of the principal balance outstanding
thereon at the time of such refinancing; and (iii) the total amount of all such
Indebtedness shall not exceed $1,200,000 at any time outstanding;
(i) Indebtedness and obligations owing under Hedging Agreements
relating to the loans under the Senior Loan Agreements and other Hedging
Agreements entered into in order to manage existing or anticipated interest
rate, exchange rate or commodity price risks and not for speculative purposes;
(j) Indebtedness and obligations of the Company and its Subsidiaries
owing under documentary letters of credit for the purchase of goods or other
merchandise (but not under standby, direct pay or other letters of credit except
for the Letters of Credit under the Senior Loan Agreements) generally;
(k) Indebtedness in respect of Guaranty Obligations (other than
Guaranty Obligations permitted pursuant to the Guaranty or under the Senior Loan
Documents) in an aggregate amount not to exceed $600,000 at any time
outstanding; and
(l) other Indebtedness of the Company and its Subsidiaries which does
not exceed $600,000 in the aggregate at any time outstanding.
9.5 LIMITATION ON LIENS. The Company, will not, and will not permit any of
its respective Subsidiaries, directly or indirectly, to create, incur, assume or
permit to exist any Lien on or with respect to any property or asset (including,
without limitation, any document or instrument
45
with respect to goods or accounts receivable) of the Company or its
Subsidiaries, whether now owned or hereafter acquired, or any income or profits
therefrom, except Permitted Encumbrances. "PERMITTED ENCUMBRANCES" means the
following:
(a) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or which are being contested in good faith with a
reserve or other appropriate provision having been made thereof;
(b) Liens of landlords, carriers, warehousemen, mechanics, materialmen
and other similar liens imposed by law, which are incurred in the ordinary
course of business for sums not more than sixty (60) days delinquent or which
are being contested in good faith by appropriate proceedings; PROVIDED that a
reserve or other appropriate provision shall have been made therefor and the
aggregate amount of such Liens is less than $100,000;
(c) Liens (other than any Lien imposed by the Employee Retirement
Income Security Act of 1974 or any rule or regulation promulgated thereunder)
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(d) Deposits in an aggregate amount not to exceed $100,000, made in the
ordinary course of business to secure liability to insurance carriers;
(e) Liens for purchase money obligations to acquire assets; PROVIDED
that:
(i) such Lien attaches to such asset concurrently with or
within 10 days after acquisition thereof;
(ii) does not exceed the purchase price of such asset; and
(iii) the Indebtedness secured by all such Liens, shall not
exceed $1,200,000; and
(iv) any such Lien encumbers only the asset so purchased;
(f) Any attachment or judgment Lien not constituting an Event of
Default;
(g) Leases or subleases granted to others not interfering in any
material respect with the business of the Company or its Subsidiaries;
(h) Easements, rights of way, restrictions and other similar charges or
encumbrances not interfering in any material respect with the ordinary conduct
of the business of the Company or any of its Subsidiaries;
46
(i) Liens existing on the date hereof and renewals and extensions
thereof, which Liens are set forth on SCHEDULE 5.25 hereto;
(j) Liens securing the Senior Credit Facility, subject to the maximum
amount of Permitted Indebtedness permitted pursuant to Section 9.4 hereof;
(k) Liens in connection with Hedging Agreements permitted in the
Original Credit Agreement;
(l) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business; and
(m) Liens arising in connection with Capitalized Leases to the extent
permitted in the Original Credit Agreement.
9.6 DISPOSITIONS OF ASSETS. The Company will not, nor will it permit any of
its Subsidiaries, directly or indirectly, to convey, sell (pursuant to a
sale/leaseback or otherwise), lease, sublease, transfer or otherwise dispose of,
or grant any Person an option to acquire, in one transaction or a series of
transactions, any of its property, business or assets, or the capital stock of
or other equity interests in any of its Subsidiaries, whether now owned or
hereafter acquired, except for:
(a) Bona fide sales of inventory to customers for fair value in the
ordinary course of business and dispositions of obsolete equipment not used or
useful in the business; and
(b) Asset Dispositions, other than the liquidation of the Inactive
Subsidiaries, if all of the following conditions are met:
(i) the market value of assets sold or otherwise disposed of
(by the Company and its Subsidiaries taken as a whole) in any fiscal year do not
exceed $1,500,000;
(ii) the Net Proceeds received is at least equal to the fair
market value of such assets;
(iii) at least 75% of the consideration received is cash or
Cash Equivalents;
(iv) after giving effect to the sale or other disposition of
the assets included within the Asset Disposition and the repayment of
Indebtedness with the proceeds thereof, the Company would be in compliance on a
pro forma basis with the covenants set forth in Section 9.8 hereof recomputed
for the most recently ended month for which information is available and is in
compliance with all other terms and conditions of this Agreement; and
(v) no Event of Default then exists or shall result from such
sale or other disposition.
9.7 LIMITATIONS ON RESTRICTED PAYMENTS. The Company shall not, and shall
not permit any of its Subsidiaries to declare, or make any Restricted Payment,
except to make dividends or
47
other distributions payable to the Company or any of its Subsidiaries which have
executed the Guaranty (other than IDT LLC) (directly or indirectly through
Subsidiaries).
9.8 FINANCIAL COVENANTS. The Company covenants and agrees that until
payment in full of all Indebtedness hereunder and under the Notes, the Company
shall comply with and shall cause each of its Subsidiaries to comply with all
covenants in this Section 9.8 applicable to such Person. Compliance with the
covenants in this Section 9.8 shall be determined on a consolidated basis in
accordance with GAAP consistently applied, unless explicitly stated otherwise.
(a) LEVERAGE RATIO. The Leverage Ratio, as of the last day of each
fiscal quarter of the Company and its Subsidiaries set forth below, shall be
less than or equal to the following:
FISCAL QUARTER ENDED RATIO
December 31, 2000 5.25:1
March 31, 2001 5.00:1
June 30, 2001 and September 30, 2001 4.75:1
December 31, 2001 and March 31, 2002 4.50:1
June 30, 2002 and September 30, 2002 4.25:1
December 31, 2002 4.00:1
March 31, 2003, June 30, 2003,
September 30, 2003, December 31, 2003,
March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004 3.75:1
March 31, 2005 and at the end of
each fiscal quarter thereafter 3.50:1
(b) FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage Ratio, as of
the last day of each fiscal quarter of the Company and its Subsidiaries
occurring during the periods indicated below, shall be greater than or equal to
the following:
PERIOD RATIO
Closing Date through and including December 31, 2004 1.00:1
January 1, 2005 through and including
December 31, 2005 .90:1
January 1, 2006 and thereafter .70:1
48
(c) INTEREST COVERAGE RATIO. The Interest Coverage Ratio, as of the
last day of each fiscal quarter of the Company and its Subsidiaries set forth
below, shall be greater than or equal to the following:
FISCAL QUARTER ENDED RATIO
December 31, 2000, March 31, 2001, June 30, 2001
and September 30, 2001 1.80:1
December 31, 2001 1.85:1
March 31, 2002 1.90:1
June 30, 2002, September 30, 2002, and
December 31, 2002 2.00:1
March 31, 2003, June 30, 2003, September 30, 2003
and December 31, 2003 2.25:1
March 31, 2004 and at the end of each
fiscal quarter thereafter 2.70:1
(d) CONSOLIDATED EBITDA. As of the last day of each fiscal quarter of
the Company indicated below, Consolidated EBITDA for the twelve month period
ending on such date shall be greater than or equal to the amount indicated
below:
FISCAL QUARTER ENDING AMOUNT
December 31, 2000, March 31, 2001,
June 30, 2001, September 30, 2001,
December 31, 2001 and March 31, 2002 $36,000,000
June 30, 2002 $38,000,000
September 30, 2002 $39,000,000
December 31, 2002 $41,000,000
49
March 31, 2003, June 30, 2003,
September 30, 2003 and December 31, 2003 $50,000,000
March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004 $56,000,000
March 31, 2005, June 30, 2005,
September 30, 2005, and December 31, 2005 $63,000,000
March 31, 2006, and at the end of
each quarter thereafter $72,000,000
(e) CONSOLIDATED CAPITAL EXPENDITURES. Consolidated Capital
Expenditures as of the end of each fiscal year of the Company indicated below
shall be less than or equal to the following:
FISCAL YEAR AMOUNT
Fiscal Year 2001 $7,000,000
Fiscal Year 2002 $6,000,000
Fiscal Year 2003 $5,800,000
Fiscal Year 2004 $6,000,000
Fiscal Year 2005 $6,200,000
Fiscal Year 2006 $6,400,000
PLUS the unused amount available for Consolidated Capital Expenditures under
this Section 9.8(e) for the immediately preceding fiscal year (excluding any
carry forward available from any prior fiscal year).
9.9 EMPLOYEE BENEFIT PLANS. The Company shall not, and shall not permit any
of its Subsidiaries or any ERISA Affiliate, without the prior approval of the
Purchaser, (a) to establish or contribute to any Defined Benefit Plan or other
employee benefit arrangement which provides post-retirement welfare benefits or
"parachute payments" (within the meaning of Section 280G(b) of the Code); or (b)
to amend any Plan if the effect of such amendment would cause such Plan to be a
plan or arrangement described in clause (a) hereof.
9.10 LIMITATION ON BUSINESS OF THE COMPANY AND SUBSIDIARIES. The Company
shall not engage in any business activity other than the ownership of the
capital stock of the Subsidiaries and the transactions contemplated by, or
permitted under, the Transaction Documents. The Subsidiaries shall not engage in
any business activity other than the business that they are currently engaged in
and the transactions contemplated by, or permitted under, the Transaction
Documents.
9.11 INVESTMENTS. Except in the ordinary course of business and consistent
with past practices, the Company shall not, and shall not permit any of its
Subsidiaries, directly or indirectly, to make or own any Investment in any
Person except: (a) Investments in Cash Equivalents; PROVIDED that such Cash
Equivalents are not subject to setoff rights in favor of the issuing bank
arising from any existing banking relationship except under the Senior Loan
Agreements; (b) intercompany loans and investments to the extent permitted under
Sections 9.2 or 9.4; (c) loans and advances to employees for moving,
entertainment, travel and other similar expenses in the ordinary course of
business not to exceed $200,000 in the aggregate at any time outstanding, (d)
receivables owing to
50
the Company or any of its Subsidiaries or any receivables and advances to
suppliers, in each case if created, acquired or made in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
(e) investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business; and (f) additional loan advances
and/or investments of a nature not contemplated by the foregoing clauses hereof,
PROVIDED that such loans, advances and/or investments made pursuant to this
clause (f) shall not exceed an aggregate amount of $150,000.
9.12 CONTINGENT OBLIGATIONS. The Company shall not, nor shall it permit any
of its Subsidiaries directly or indirectly to create or become or be liable with
respect to any Contingent Obligation except those; (a) resulting from
endorsements of negotiable instruments for collection in the ordinary course of
business; (b) arising under the Transaction Documents; (c) existing on the
Closing Date and as described in SCHEDULE 9.12 annexed hereto; (d) arising with
respect to customary indemnification and purchase price adjustment obligations
incurred in connection with any Asset Dispositions; (e) incurred in the ordinary
course of business with respect to surety and appeal bonds, performance and
return-of-money bonds and similar obligations not exceeding any time outstanding
$100,000 in aggregate liability; (f) incurred with respect to any Indebtedness
permitted pursuant to Section 9.4 hereof; (g) not otherwise permitted by clauses
(a) through (f) above so long as any such Contingent Obligations, in the
aggregate at any time outstanding do not exceed $100,000.
9.13 MANAGEMENT FEES AND COMPENSATION. The Company shall not, nor shall it
permit any of its Subsidiaries, directly or indirectly, to pay any management,
consulting or similar fees to any Affiliate or to any director, officer or
employee of the Company or any of its Subsidiaries except reasonable director's
fees and expenses and except as set forth on SCHEDULE 9.13. Notwithstanding the
foregoing, no payments may be made with respect to any items set forth on
SCHEDULE 9.13 upon the incurrence and during the continuation of an Event of
Default.
9.14 FISCAL YEAR. The Company and its Subsidiaries shall not change their
fiscal year.
9.15 PRESS RELEASE; PUBLIC OFFERING MATERIALS. Neither the Company nor any
of its Affiliates shall, nor shall the Company permit any of its Subsidiaries
to, disclose the name of any Purchaser or any of its respective Affiliates in
any press release or in any prospectus, proxy statement or other materials filed
with the governmental entity relating to a public offering of the capital stock
or other equity interest of the Company or any of its Subsidiaries without such
Purchaser's or such Affiliate's prior written consent which shall not be
unreasonably withheld.
9.16 SUBSIDIARIES. Except as permitted in Section 8.1(j), the Company shall
not, nor shall any of the Subsidiaries be permitted to, directly or indirectly,
to establish, create or acquire any new Subsidiary.
9.17 NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO THE COMPANY. Except as
otherwise provided herein and in the Original Credit Agreement, the Company will
not and will not permit any of its Subsidiaries directly or indirectly to create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of the Company or
51
any such Subsidiary to: (a) pay dividends or make any other distribution on any
of such Subsidiary's capital stock owned by the Company or any Subsidiary; (b)
subject to subordination provisions for the benefit of the Purchaser, pay any
Indebtedness owed to the Company or any other Subsidiary; (c) make loans or
advances to the Company or any other Subsidiary; or (d) transfer any of its
property or assets to the Company or any other Subsidiary.
ARTICLE X
PREPAYMENT
10.1 OPTIONAL PREPAYMENT. Subject to Section 7 of the Notes, the Company
may prepay outstanding principal (together with accrued interest) on the Notes
in accordance with the "OPTIONAL PREPAYMENT" provisions set forth in Section 4
of the Notes.
10.2 MANDATORY PREPAYMENT. Subject to Section 7 of the Notes, the Company
shall prepay outstanding principal (together with accrued interest) on the Notes
in accordance with the "MANDATORY PREPAYMENT" provisions set forth in Section 3
of the Notes.
ARTICLE XI
MISCELLANEOUS
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties made herein shall survive the execution and delivery of this
Agreement, any investigation by or on behalf of the Purchasers, acceptance of
the Securities and payment therefor, or termination of this Agreement.
11.2 NOTICES. All notices, demands and other communications provided for or
permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopier (with receipt
confirmed), courier service or personal delivery:
(a) if to WMF:
X. X. Xxxxxxx Mezzanine Fund, L.P.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xx. Xxxxxx X. X'Xxxxx
Xx. Xxxxx X. Xxxxxx
Xx. Xxxxxxx X. Xxxxxxxxx
52
with a copy to:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Xxxx Xxxx, Esq.
(b) if to WMVF:
X. X. Xxxxxxx Market Value Fund, L.P.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xx. Xxxxxx X. X'Xxxxx
Xx. Xxxxx X. Xxxxxx
Xx. Xxxx Xxxxxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx, Esq.
(c) if to XxxxxXxxx:
XxxxxXxxx Capital, L.P.177 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xx. Xxxxxx X. X'Xxxxx
Xx. Xxxxx X. Xxxxxx
Xx. Xxxxx Xxxxxxx
with a copy to:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Xxxx Xxxx, Esq.
53
(d) If to First Union:
First Union Investors, Inc.
000 X. Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
with a copy to:
Xxxxx & Xxx Xxxxx, PLC
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
(e) If to Bank of New York
BNY Capital Partners, L.P.
Xxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No. (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
with a copy to:
X'Xxxxxxxx Graev & Karabell
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
(f) if to the Company:
Integrated Defense Technologies, Inc.
x/x Xxx Xxxxxxx Xxxxxxx Xxxx, X.X.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xx. Xxxxxx X. XxXxxx and
Xx. Xxxxxx X. Xxxxxxxx
with a copy to:
Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxxx X. Xxxx, Esq.
54
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; if mailed, five
Business Days after being deposited in the mail, postage prepaid; or if
telecopied, when receipt is acknowledged.
11.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties hereto.
Subject to applicable securities laws, the Purchasers may assign any of their
respective rights under any of the Transaction Documents to any Person, and any
holder of any Notes, Warrants or shares of Common Stock issuable upon exercise
of any Warrants may assign such Notes, Warrants or shares of Common Stock
issuable upon exercise of such Warrants to any Person. The Company may not
assign any of its rights under this Agreement without the prior written consent
of the Purchasers, and any such purported assignment by the Company without the
written consent of the Purchasers shall be void and of no effect. Except as
provided in Article 7, no Person other than the parties hereto and their
successors and permitted assigns is intended to be a beneficiary of any of the
Transaction Documents.
11.4 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of any of the parties hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the parties
hereto at law, in equity or otherwise.
(b) No amendment, supplement or modification of or to any provision in
this Agreement or any of the Notes, or any waiver of any such provision or
consent to any departure by any party from the terms of any such provision may
be made orally.
(c) Any (i) amendment, supplement or modification hereto or to any of
the Notes, (ii) consent hereunder or under any of the Notes or (iii) waiver of
any provision (collectively, "MODIFICATION") of this Agreement or of any of the
Notes shall be effective as to all holders of the Notes if given pursuant to a
written agreement signed by the Company and the holders of at least two-thirds
(2/3) of the principal amount of the Notes then outstanding (the "REQUISITE
NOTEHOLDERS"); PROVIDED, HOWEVER, that no Modification with respect to this
Agreement or any of the Notes shall (1) decrease or forgive the principal of
such Note, (2) extend the originally scheduled time of payment of the principal
of such Note or the time of payment of interest on such Note, (3) reduce the
rate of interest payable on such Note, or (4) permit any further subordination
of the principal or interest of such Note beyond that set forth in Section 7 of
such Note, or (5) release any Guarantor from any of its obligations under the
Guaranty, without the prior written consent of the holder of each Note. Any
Modification with respect to this Agreement shall be effective as to all holders
of Warrants if given pursuant to a written agreement signed by the Company and
the holders of Warrants
55
exercisable into at least a majority of the shares of Common Stock for which all
of the Warrants are then exercisable in the aggregate. No Modification of any of
the provisions of Section 11.4(b), 11.4(c), or 11.4(d) shall be effective
without the prior written consent of all of the parties hereto.
(d) Any amendment, supplement or modification of or to any provision of
this Agreement or any Note, any waiver of any provision of this Agreement or any
Note, and any consent to any departure by any party from the terms of any
provision of this Agreement or any Note made or given in conformity herewith,
shall (i) apply to all of the parties hereto and their successors and assigns
and (ii) be effective only in the specific instance and for the specific purpose
for which made or given. Except where notice is specifically required by this
Agreement, no notice to or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
11.5 SIGNATURES; COUNTERPARTS. Telefacsimile transmissions of any executed
original document and/or retransmission of any executed telefacsimile
transmission shall be deemed to be the same as the delivery of an executed
original. At the request of any party hereto, the other parties hereto shall
confirm telefacsimile transmissions by executing duplicate original documents
and delivering the same to the requesting party or parties. This Agreement may
be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
11.6 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
11.8 JURISDICTION, JURY TRIAL WAIVER, ETC.
(a) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AGREES THAT THE ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
NOTES, THE WARRANTS OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY EXPRESSLY
SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES
THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH
COURTS ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 11.2, SUCH SERVICE TO
BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.
56
(b) EACH OF THE COMPANY AND ITS SUBSIDIARIES HEREBY WAIVES ITS RIGHT TO
A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, THE NOTES, THE WARRANTS OR ANY OF THE OTHER
TRANSACTION DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH OF
THE COMPANY AND ITS SUBSIDIARIES HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. EACH OF THE COMPANY AND ITS SUBSIDIARIES (I)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PURCHASER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PURCHASER WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT
THE PURCHASER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
TRANSACTION DOCUMENTS TO WHICH THEY ARE PARTY BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
11.9 SEVERABILITY. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
11.10 RULES OF CONSTRUCTION. Unless the context otherwise requires, "or" is
not exclusive, and references to sections or subsections refer to sections or
subsections of this Agreement.
11.11 ENTIRE AGREEMENT. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits and
schedules hereto, and the other Transaction Documents supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
11.12 CERTAIN EXPENSES. The Company will pay all expenses of the Purchasers
(including, without limitation, fees, charges and disbursements of counsel) in
connection with any amendment, supplement, modification or waiver of or to any
provision of this Agreement or any of the other Transaction Documents or any
documents relating thereto (including, without limitation, a response to a
request by the Company for the Purchasers' consent to any action otherwise
prohibited hereunder or thereunder), or consent to any departure from, the terms
of any provision of this Agreement or such other documents.
11.13 PUBLICITY. Except as may be required by applicable law, none of the
parties hereto shall issue a publicity release or announcement or otherwise make
any public disclosure concerning
57
this Agreement or the transactions contemplated hereby, without prior approval
by the other party hereto. If any announcement is required by law to be made by
any party hereto, prior to making such announcement such party will deliver a
draft of such announcement to the other parties and shall give the other parties
an opportunity to comment thereon.
11.14 FURTHER ASSURANCES. Each of the parties shall execute such documents
and perform such further acts (including, without limitation, obtaining any
consents, exemptions, authorizations, or other actions by, or giving any notices
to, or making any filings with, any Governmental Authority or any other Person)
as may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement.
58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized as
of the date first above written.
INTEGRATED DEFENSE TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. XxXxxx
--------------------------------------------
Xxxxxx X. XxXxxx
Chairman
X. X. XXXXXXX MEZZANINE FUND, L.P.
By: Xxxxxxx XX, LLC,
Its General Partner
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxx
A Managing Member
X. X. XXXXXXX MARKET VALUE FUND, L.P.
By: Whitney Market Value GP, LLC,
Its General Partner
By:
--------------------------------------------
Name:
A Managing Member
XXXXXXXXX CAPITAL, L.P.
By: XxxxxXxxx XX, L.L.C.,
Its General Partner
By: /s/
--------------------------------------------
Name:
A Managing Member
[SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE (CONT'D ON NEXT PAGE)]
59
FIRST UNION INVESTORS, INC.
By: /s/ Xxxx Xxxxxxxxx
--------------------------------------------
Xxxx Xxxxxxxxx
Senior Vice President
BNY CAPITAL PARTNERS, L.P.
By: BNY Capital Management LLC,
Its General Partner
By: BNY Mezzanine Capital, L.P.,
Its sole member
By: BNY Capital SBIC, LLC,
Its General Partner
By: /s/ Xxxx Xxxxxxxx
--------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Principal
[SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE]
60
