Exhibit 10.1
EXECUTION VERSION
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CREDIT AGREEMENT
between
UNIROYAL TECHNOLOGY CORPORATION,
as BORROWER
and
EMCORE CORPORATION,
as LENDER
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Dated as of August 2, 2001
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TABLE OF CONTENTS
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SECTION 1. Amount and Terms of Credit.......................................1
1.01 The Commitment................................................1
1.02 Notice of Borrowing...........................................1
1.03 Disbursement of Funds.........................................1
1.04 Notes.........................................................1
1.05 Interest......................................................2
SECTION 2. Reductions of Commitment.........................................2
2.01 Mandatory Reduction of Commitments............................2
SECTION 3. Prepayments; Payments; Taxes.....................................3
3.01 Voluntary Prepayments.........................................3
3.02 Mandatory Repayments..........................................3
3.03 Method and Place of Payment...................................4
3.04 Net Payments..................................................4
SECTION 4. Conditions Precedent to the Loan on the Closing Date.............5
4.01 Execution of Agreement; Note; Notice of Borrowing.............5
4.02 Officer's Certificate.........................................6
4.03 Opinions of Counsel...........................................6
4.04 Corporate Documents; Proceedings; etc.........................6
4.05 Plans; Shareholders' Agreements; Management Agreements;
Employment Agreements; Non-Compete Agreements; Collective
Bargaining Agreements; Tax Sharing Agreements; Existing
Indebtedness
Agreements.................................................6
4.06 Sale..........................................................7
4.07 Adverse Change, etc...........................................7
4.08 Litigation....................................................8
4.09 Security Agreement............................................8
4.10 Subsidiaries Guaranty.........................................9
4.11 Financial Statements; Pro Forma Balance Sheet; Projections....9
4.12 Solvency Certificate; Insurance Certificates..................9
4.13 No Default; Representations and Warranties....................9
SECTION 5. Representations, Warranties and Agreements.......................9
5.01 Organizational Status........................................10
5.02 Power and Authority..........................................10
5.03 No Violation.................................................10
5.04 Approvals....................................................10
(i)
Page
5.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc.............................11
5.06 Litigation...................................................12
5.07 True and Complete Disclosure.................................12
5.08 Use of Proceeds; Margin Regulations..........................12
5.09 Tax Returns and Payments.....................................13
5.10 Compliance with ERISA........................................13
5.11 The Security Documents.......................................14
5.12 Representations and Warranties in the Documents..............14
5.13 Properties...................................................14
5.14 Capitalization...............................................15
5.15 Subsidiaries.................................................15
5.16 Compliance with Statutes, etc................................15
5.17 Investment Company Act.......................................15
5.18 Public Utility Holding Company Act...........................15
5.19 Environmental Matters........................................15
5.20 Labor Relations..............................................16
5.21 Patents, Licenses, Franchises and Formulas...................16
5.22 Indebtedness.................................................17
5.23 Transaction..................................................17
5.24 Insurance....................................................17
SECTION 6. Affirmative Covenants...........................................17
6.01 Information Covenants........................................17
(a) Monthly Reports......................................17
(b) Quarterly Financial Statements.......................18
(c) Annual Financial Statements..........................18
(e) Budgets..............................................18
(f) Officer's Certificates...............................18
(g) Notice of Default, Litigation and Material
Adverse Effect.....................................19
(h) Other Reports and Filings............................19
(i) Environmental Matters................................19
(j) Other Information....................................20
6.02 Books, Records and Inspections...............................20
6.03 Maintenance of Property; Insurance...........................20
6.04 Existence; Franchises........................................21
6.05 Compliance with Statutes, etc................................21
6.06 Compliance with Environmental Laws...........................21
6.07 ERISA........................................................22
6.08 End of Fiscal Years; Fiscal Quarters.........................23
6.09 Performance of Obligations...................................23
6.10 Additional Security; Further Assurances......................24
6.11 Disposition..................................................24
6.12 Use of Proceeds..............................................24
(ii)
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SECTION 7. Negative Covenants..............................................24
7.01 Liens........................................................25
7.02 Consolidation, Merger, Purchase or Sale of Assets, etc.......27
7.03 Dividends....................................................29
7.04 Indebtedness.................................................30
7.05 Advances, Investments and Loan...............................31
7.06 Transactions with Affiliates.................................33
7.07 Limitation on Voluntary Payments and Modifications of Certain
Indebtedness; Modifications of Certificate of Incorporation,
By-Laws and Certain Other Agreements,
etc.......................................................33
7.08 Limitation on Certain Restrictions on Subsidiaries...........34
7.09 Limitation on Issuance of Capital Stock......................34
7.10 Business.....................................................35
7.11 Limitation on Creation of Subsidiaries.......................35
SECTION 8. Events of Default...............................................35
8.01 Payments.....................................................35
8.02 Representations, etc.........................................35
8.03 Covenants....................................................35
8.04 Default Under Other Agreements...............................36
8.05 Bankruptcy, etc..............................................36
8.06 ERISA........................................................36
8.07 Security Documents...........................................37
8.08 Subsidiaries Guaranty........................................37
8.09 Judgments....................................................38
8.10 Change of Control............................................38
SECTION 9. Definitions and Accounting Terms................................38
9.01 Defined Terms................................................38
SECTION 10. Conversion.....................................................50
10.01 Conversion of Note..........................................50
SECTION 11. Miscellaneous..................................................55
11.01 Payment of Expenses, etc....................................55
11.02 Right of Setoff.............................................56
11.03 Notices.....................................................56
11.04 Benefit of Agreement; Assignments; Participations...........56
11.05 No Waiver; Remedies Cumulative..............................57
11.05 Calculations; Computations; Adjustments; Accounting Terms...57
11.07 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL................................................57
11.08 Counterparts................................................59
11.09 Effectiveness...............................................59
(iii)
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11.10 Headings Descriptive........................................59
11.11 Amendment or Waiver; etc....................................59
11.12 Survival....................................................59
11.13 Domicile of Loan............................................59
11.14 Confidentiality.............................................59
11.15 Register....................................................60
(iv)
SCHEDULE I Commitments
SCHEDULE II Lender Addresses
SCHEDULE III Plans
SCHEDULE IV Real Property
SCHEDULE V Subsidiaries
SCHEDULE VI Existing Indebtedness
SCHEDULE VII Insurance
SCHEDULE VIII Existing Liens
SCHEDULE IX Existing Investments
SCHEDULE X Indebtedness to be Refinanced
SCHEDULE XI Existing Affiliate Transactions
EXHIBIT A Notice of Borrowing
EXHIBIT B Note
EXHIBIT C Opinion of Xx Xxxxxx X. Xxxxxx, Esq.,
General Counsel to the Borrower and each of
its Subsidiaries
EXHIBIT D Officers' Certificate
EXHIBIT E Security Agreement
EXHIBIT F Subsidiaries Guaranty
EXHIBIT G Solvency Certificate
EXHIBIT H Intercompany Note
EXHIBIT I Shareholder Subordinated Note
EXHIBIT J Control Agreement
(v)
CREDIT AGREEMENT, dated as of August 2, 2001, between UNIROYAL
TECHNOLOGY CORPORATION, a Delaware corporation (the "Borrower"), and EMCORE
CORPORATION, a New Jersey corporation, as Lender (the "Lender") (all capitalized
terms used herein and defined in Section 9 are used herein as therein defined).
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set forth herein,
the Lender is willing to make available to the Borrower the credit facility
provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitment. Subject to and upon the terms and conditions set
forth herein, the Lender agrees to make a term loan (the "Loan") to the
Borrower, which Loan (i) may only be incurred by the Borrower on the Closing
Date, (ii) shall be made by the Lender in that aggregate principal amount which
does not exceed the Commitment of the Lender on the Closing Date (before giving
effect to the termination thereof on such date pursuant to Section 2.01(c)).
Once repaid, the Loan incurred hereunder may not be reborrowed.
1.02 Notice of Borrowing. When the Borrower desires to incur the Loan
hereunder, the Borrower shall give the Lender notice at the Notice Office on the
date thereof, provided that such notice shall be deemed to have been given on a
certain day only if given before 11:00 A.M. (New York time) on such day. Such
notice (the "Notice of Borrowing") shall be irrevocable and shall be given by
the Borrower in writing in the form of Exhibit A, appropriately completed to
specify the aggregate principal amount of the Loan to be incurred on the Closing
Date.
1.03 Disbursement of Funds. No later than 2:00 P.M. (New York time) on
the Closing Date, the Lender will make available the Borrowing requested to be
made on such date in accordance with Section 1.02. The Borrowing will be made
available in Dollars and in immediately available funds by way of wire transfer
to the Borrower's account specified in the Notice of Borrowing.
1.04 Notes. (a) The Borrower's obligation to pay the principal of, and
interest on, the Loan made by the Lender shall be evidenced in the Register
maintained by the Lender pursuant to Section 11.15 and shall also be evidenced
by a promissory note duly executed and delivered by the Borrower substantially
in the form of Exhibit B, with blanks appropriately completed in conformity
herewith (the "Note").
(b) The Note issued to the Lender shall (i) be executed by the
Borrower, (ii) be payable to the Lender or its registered assigns and be dated
the Closing Date (or, if issued after the Closing Date, be dated the date of
issuance thereof), (iii) be in a stated principal amount equal
to the Loan made by the Lender on the Closing Date (or, if issued after the
Closing Date, be in a stated principal amount equal to the outstanding principal
amount of the Loan of the Lender at such time) and be payable in the outstanding
principal amount of the Loan evidenced thereby, (iv) mature on the Final
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.05, (vi) be subject to voluntary prepayment as provided in Section
3.01, and mandatory repayment as provided in Section 3.02, and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
(c) The Lender will note on its internal records the amount of the Loan
made by it and each payment in respect thereof and will prior to any transfer of
its Note endorse on the reverse side thereof the outstanding principal amount of
the Loan evidenced thereby. Failure to make any such notation or any error in
such notation shall not affect the Borrower's obligations in respect of the
Loan.
1.05 Interest. (a) The Borrower agrees to pay interest in respect of
the unpaid principal amount of the Loan from the date of Borrowing thereof until
the repayment in full thereof at a rate per annum which shall be equal to the
Prime Rate as in effect from time to time.
(b) From and after the Additional Interest Trigger Date, principal
shall bear additional interest as follows: the Borrower shall issue to the
Lender Four Hundred Thirty-Three (433) shares of UTC Common Stock (subject to
appropriate adjustments in the event of a stock split or a similar event), or
such percentage of such amount as shall equal the equivalent percentage of the
principal amount of the Loan then outstanding, per calendar day until all
Obligations have been paid in full. Interest which accrues under this Section
1.05(b) shall be payable on demand. UTC Common Stock to be issued by the
Borrower under this Section 1.05(b) shall be issued immediately upon request of
the Lender.
(c) Accrued (and theretofore unpaid) cash interest shall be payable in
respect of the Loan, monthly in arrears on each Monthly Payment Date and on the
Final Maturity Date and on any repayment or prepayment (on the amount repaid or
prepaid), and at maturity (whether by acceleration or otherwise).
SECTION 2. Reductions of Commitment.
2.01 Mandatory Reduction of Commitments. (a) The Commitment shall
terminate in its entirety on August 31, 2001 unless the Closing Date has
occurred on or before such date.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 2.01, the Commitment shall terminate in its entirety on the date
of consummation of the Disposition.
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 2.01, the Commitment shall terminate in its entirety on the
Closing Date (after giving effect to the incurrence of the Loan on such date).
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SECTION 3. Prepayments; Payments; Taxes.
3.01 Voluntary Prepayments. The Borrower shall have the right to prepay
the Loan, without premium or penalty, in whole or in part at any time and from
time to time on the following terms and conditions: (i) the Borrower shall give
the Lender prior to 1:00 P.M. (New York time) at the Notice Office, at least one
Business Day's prior written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loan, which notice (in each case) shall
specify the amount of such prepayment; (ii) each partial prepayment of Loan
pursuant to this Section 3.01(a) shall be in an aggregate principal amount of at
least $25,000.
3.02 Mandatory Repayments. (a) In addition to any other mandatory
repayments pursuant to this Section 3.02, within one Business Day after each
date on or after the Closing Date upon which the Borrower or any of its
Subsidiaries receives any cash proceeds from any capital contribution or any
sale or issuance of its equity or securities convertible into its equity
(including, without limitation, convertible debt) (other than cash proceeds
received from equity contributions to any Guarantor Subsidiary of the Borrower
to the extent made by the Borrower or another Guarantor Subsidiary of the
Borrower) an amount equal to 100% of the Net Equity Proceeds of such capital
contribution or sale or issuance of equity shall be applied on such date as a
mandatory repayment of principal of the outstanding Loan until paid in full.
(b) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each date on or after the Closing Date upon which the Borrower
or any of its Subsidiaries receives any cash proceeds from any incurrence by the
Borrower or any of its Subsidiaries of Indebtedness for borrowed money (other
than Indebtedness for borrowed money permitted to be incurred pursuant to
Section 7.04 as such Section is in effect on the Closing Date), an amount equal
to 100% of the Net Debt Proceeds of the respective incurrence of Indebtedness
shall be applied on such date as a mandatory repayment of principal of the
outstanding Loan until paid in full.
(c) In addition to any other mandatory repayments pursuant to this
Section 3.02, within one Business Day after each date on or after the Closing
Date upon which the Borrower or any of its Subsidiaries receives any cash
proceeds from any Asset Sale, an amount equal to 100% of the Net Sale Proceeds
therefrom shall be applied on such date as a mandatory repayment until the
Obligations are paid in full.
(d) In addition to any other mandatory repayments pursuant to this
Section 3.02, within 10 days following each date on or after the Closing Date
upon which the Borrower or any of its Subsidiaries receives any cash proceeds
from any Recovery Event (other than Recovery Events in which the Net Insurance
Proceeds therefrom do not exceed $1,000,000), an amount equal to 100% of the Net
Insurance Proceeds from such Recovery Event shall be applied as a mandatory
repayment of principal of the outstanding Loan until paid in full; provided that
so long as no Specified Default then exists and such Net Insurance Proceeds do
not exceed $5,000,000, such Net Insurance Proceeds shall not be required to be
so applied on such date to the extent that the Borrower has delivered a
certificate to the Lender on or prior to such date stating that such Net
Insurance Proceeds shall be used to replace or restore any properties or assets
in respect of which such Net Insurance Proceeds were paid within 270 days
following the
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date of the receipt of such Net Insurance Proceeds (which certificate shall set
forth the estimates of the Net Insurance Proceeds to be so expended), and
provided further, that (i) if the amount of such Net Insurance Proceeds exceeds
$5,000,000, then the entire amount of such Net Insurance Proceeds (and not just
the portion of such Net Insurance Proceeds in excess of $5,000,000) shall be
applied as a mandatory repayment of the Loan as provided above in this Section
3.02(d), (ii) if all or any portion of such Net Insurance Proceeds not required
to be applied to the repayment of the outstanding Loan pursuant to the preceding
proviso are not so used within 90 days after the date of the receipt of such Net
Insurance Proceeds (or such earlier date, if any, as the Borrower determines not
to reinvest the Net Insurance Proceeds relating to such Recovery Event as set
forth above), such remaining portion shall be applied on the last day of such
period (or such earlier date, as the case may be) as a mandatory repayment of
principal of the outstanding Loan as provided above in this Section 3.02(d)
without regard to the preceding proviso.
(e) In addition to any other mandatory repayments pursuant to this
Section 3.02, (i) the outstanding Loan shall be repaid in full on the Final
Maturity Date and (ii) unless the Lender otherwise agrees, the outstanding Loan
shall be repaid in full on the earlier of the date on which (A) a Change of
Control occurs or (B) the Disposition occurs.
3.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement (other than payments of
additional interest pursuant to Section 1.05(b)) or under the Note shall be made
to the Lender for its own account not later than 1:00 P.M. (New York time) on
the date when due and shall be made in Dollars in immediately available funds at
the Notice Office (and, to the extent that any UTC Common Stock is to be issued
pursuant to Section 1.05(b), such issuance shall occur by the delivery of stock
certificates or such other documentation satisfactory to the Lender in its
discretion, evidencing the issuance of the UTC Common Stock to the Borrower).
Whenever any payment to be made hereunder or under the Note shall be stated to
be due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate during such
extension.
3.04 Net Payments. (a) All payments made by the Borrower hereunder or
under the Note will be made without setoff, counterclaim or other defense;
provided, further, that for the purpose of this Section 3.04(a), "payment" shall
be deemed to include, without limitation, the issuance of UTC Common Stock. All
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in the
second succeeding sentence, any tax imposed on or measured by the net income or
profits of the Lender pursuant to the laws of the jurisdiction in which it is
organized or the jurisdiction in which the principal office of the Lender is
located or any subdivision thereof or therein) and all interest, penalties or
similar liabilities with respect to such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under the Note, after withholding or deduction
4
for or on account of any Taxes, will not be less than the amount provided for
herein or in the Note. If any amounts are payable in respect of Taxes pursuant
to the preceding sentence, the Borrower agrees to reimburse the Lender, within
three Business Days after the written request of the Lender, for taxes imposed
on or measured by the net income or profits of the Lender pursuant to the laws
of the jurisdiction in which the Lender is organized or in which the principal
office or applicable lending office of the Lender is located or under the laws
of any political subdivision or taxing authority of any such jurisdiction in
which the Lender is organized or in which the principal office or applicable
lending office of the Lender is located and for any withholding of taxes as the
Lender shall determine are payable by, or withheld from, the Lender, in respect
of such amounts so paid to or on behalf of the Lender pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of the Lender
pursuant to this sentence. The Borrower will furnish to the Lender within 30
days after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by the Borrower. The
Borrower agrees to indemnify and hold harmless the Lender, and reimburse the
Lender within three Business Days after its written request, for the amount of
any Taxes so levied or imposed and paid by the Lender.
(b) If the Borrower pays any additional amount under this Section 3.04
to the Lender and the Lender determines in its sole discretion that it has
actually received or realized in connection therewith any refund or any
reduction of, or credit against, its Tax liabilities in or with respect to the
taxable year in which the additional amount is paid (a "Tax Benefit"), the
Lender shall pay to the Borrower an amount that the Lender shall, in its sole
discretion, determine is equal to the net benefit, after tax, which was obtained
by the Lender in such year as a consequence of such Tax Benefit; provided,
however, that (i) the Lender may determine in its sole discretion consistent
with the policies of the Lender whether to seek a Tax Benefit, (ii) any Taxes
that are imposed on the Lender as a result of a disallowance or reduction
(including through the expiration of any tax carryover or carryback of such
Lender that otherwise would not have expired) of any Tax Benefit with respect to
which the Lender has made a payment to the Borrower pursuant to this Section
3.04(b) shall be treated as a Tax for which the Borrower is obligated to
indemnify the Lender pursuant to this Section 3.04 without any exclusions or
defenses, (iii) nothing in this Section 3.04(b) shall require the Lender to
disclose any confidential information to the Borrower (including, without
limitation, the Lender's tax returns), and (iv) the Lender shall not be required
to pay the Borrower any amounts pursuant to this Section 3.04(b) at any time
that a Specified Default exists.
SECTION 4. Conditions Precedent to the Loan on the Closing Date. The
obligation of the Lender to make the Loan on the Closing Date is subject to the
satisfaction of the following conditions on or prior to the Closing Date:
4.01 Execution of Agreement; Note; Notice of Borrowing. (i) This
Agreement shall have been executed and delivered as provided in Section 11.09
and (ii) there shall have been delivered to the Lender the Note executed by the
Borrower in the amount, maturity and as otherwise provided herein and (iii)
there shall have been delivered to the Lender the Notice of Borrowing on the
Closing Date as provided in Section 1.02.
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4.02 Officer's Certificate. The Lender shall have received a
certificate, dated the Closing Date and signed on behalf of the Borrower by the
Chairman of the Board, the Chief Executive Officer or the President or any Vice
President of the Borrower, certifying on behalf of the Borrower that all of the
conditions in Sections 4.06, 4.07, 4.08 and 4.13 have been satisfied on such
date (except to the extent that any exception is satisfactory to the Lender).
4.03 Opinions of Counsel. The Lender shall have received (i) from
Xxxxxx X. Xxxxxx, Esq., general counsel of the Borrower, an opinion addressed to
the Lender and dated the Closing Date covering the matters set forth in Exhibit
C and such other matters incident to the transactions contemplated herein as the
Lender may reasonably request, and (ii) reliance letters addressed to the Lender
and dated the Closing Date with respect to the opinions delivered pursuant to
the other Documents, which reliance letters and opinions shall be in form and
substance reasonably satisfactory to the Lender.
4.04 Corporate Documents; Proceedings; etc. (a) The Lender shall have
received a certificate from each Credit Party, dated the Closing Date, signed by
the Chairman of the Board, the President or any Vice President of such Credit
Party, and attested to by the Secretary or any Assistant Secretary of such
Credit Party, in the form of Exhibit D with appropriate insertions, together
with copies of the certificate of incorporation and by-laws (or equivalent
organizational documents) of such Credit Party and the resolutions of such
Credit Party referred to in such certificate, and each of the foregoing shall be
in form and substance reasonably acceptable to the Lender.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement
and the other Documents shall be reasonably satisfactory in form and substance
to the Lender, and the Lender shall have received all information and copies of
all documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and bring-down telegrams or
facsimiles, if any, which the Lender reasonably may have requested in connection
therewith, such documents and papers where appropriate to be certified by proper
corporate or governmental authorities.
4.05 Plans; Shareholders' Agreements; Management Agreements; Employment
Agreements; Non-Compete Agreements; Collective Bargaining Agreements; Tax
Sharing Agreements; Existing Indebtedness Agreements. There shall have been
delivered to the Lender true and correct copies of the following documents:
(i) all Plans (and for each Plan that is required to file an annual
report on Internal Revenue Service Form 5500-series, a copy of the most
recent such report (including, to the extent required, the related financial
and actuarial statements and opinions and other supporting statements,
certifications, schedules and information), and for each Plan that is a
"single-employer plan," as defined in Section 4001(a)(15) of ERISA, the most
recently prepared actuarial valuation therefor) and any other "employee
benefit plans," as defined in Section 3(3) of ERISA, and any other material
agreements, plans or arrangements, with or for the benefit of current or
former employees of the Borrower or any of its Subsidiaries or ERISA
Affiliates (provided that the foregoing shall apply in the case of any
multiemployer plan, as defined in Section 4001(a)(3) of ERISA, only to the
extent that
6
any document described therein is in the possession of the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate or reasonably available
thereto from the sponsor or trustee of any such Plan);
(ii) all agreements entered into by the Borrower or any Subsidiary
Guarantors governing the terms and relative rights of its capital stock and
any agreements entered into by its shareholders to which the Borrower is a
party relating to any such entity with respect to its capital stock
(collectively, the "Shareholders' Agreements");
(iii) except for the Employment Agreements delivered pursuant to clause
(v) of this Section 4.05, all material agreements with members of, or with
respect to, the management of the Borrower or any Subsidiary Guarantors
(collectively, the "Management Agreements");
(iv) all material employment agreements entered into by the Borrower or
any Subsidiary Guarantors (collectively, the "Employment Agreements");
(v) all non-compete agreements entered into by the Borrower or any
Subsidiary Guarantors (collectively, the "Non-Compete Agreements");
(vi) all collective bargaining agreements applying or relating to any
employee of the Borrower or any Subsidiary Guarantors (collectively, the
"Collective Bargaining Agreements");
(vii) all tax sharing, tax allocation and other similar agreements
entered into by the Borrower or any Subsidiary Guarantors (collectively, the
"Tax Sharing Agreements"); and
(viii) all agreements evidencing or relating to Indebtedness of the
Borrower or any Subsidiary Guarantors which is to remain outstanding after
giving effect to the Transaction (collectively, the "Existing Indebtedness
Agreements");
all of which Plans, Shareholders' Agreements, Management Agreements, Employment
Agreements, Non-Compete Agreements, Collective Bargaining Agreements, Tax
Sharing Agreements and Existing Indebtedness Agreements shall be in form and
substance reasonably satisfactory to the Lender and shall be in full force and
effect on the Closing Date.
4.06 Sale. The Sale shall have been consummated in all material
respects in accordance with the Sale Documents and all applicable laws, and each
of the conditions precedent to the consummation of the Sale as set forth in the
Sale Documents shall have been satisfied and not waived, except with the consent
of the Lender, to the reasonable satisfaction of the Lender.
4.07 Adverse Change, etc. (a) Except as set forth on Schedule 4.07,
nothing shall have occurred (and the Lender shall not have become aware of any
facts or conditions not previously known) since October 1, 2000 which the Lender
shall reasonably determine has had, or could reasonably be expected to have, (i)
a Material Adverse Effect or (ii) a material adverse effect on the Transaction.
7
(b) All necessary governmental (domestic and foreign) and third party
approvals and/or consents in connection with the Transaction and the other
transactions contemplated by the Documents and otherwise referred to herein or
therein shall have been obtained and remain in effect, and all applicable
waiting periods with respect thereto shall have expired without any action being
taken by any competent authority which restrains, prevents or imposes materially
adverse conditions upon the consummation of the Transaction or the other
transactions contemplated by the Documents or otherwise referred to herein or
therein. There shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the Transaction or the other transactions contemplated by the
Documents or otherwise referred to herein or therein.
4.08 Litigation. There shall be no actions, suits or proceedings
pending or threatened (i) with respect to the Transaction, this Agreement or any
other Document which the Lender shall reasonably determine could reasonably be
expected to be material or (ii) which the Lender shall reasonably determine
could reasonably be expected to have a Material Adverse Effect.
4.09 Security Agreement Each Credit Party shall have duly authorized,
executed and delivered the Security Agreement in the form of Exhibit E (as
modified, supplemented or amended from time to time, the "Security Agreement")
covering all of such Credit Party's present and future Security Agreement
Collateral, together with:
(i) proper Financing Statements (Form UCC-1 or the equivalent) fully
executed for filing under the UCC or other appropriate filing offices of
each jurisdiction as may be necessary or, in the reasonable opinion of the
Lender, desirable to perfect the security interests purported to be created
by the Security Agreement;
(ii) copies of Requests for Information or Copies (Form UCC-11), or
equivalent reports, listing all effective financing statements that name the
Borrower or any of its Subsidiaries as debtor and that are filed in the
jurisdictions referred to in clause (i) above, together with copies of such
other financing statements that name the Borrower or any of its Subsidiaries
as debtor (none of which shall cover any of the Collateral except to the
extent evidencing Permitted Liens or in respect of which the Lender shall
have received termination statements (Form UCC-3) or such other termination
statements as shall be required by local law fully executed for filing);
(iii) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the reasonable opinion of the Lender, desirable to perfect the security
interests intended to be created by the Security Agreement; and
(iv) evidence that all other actions necessary or, in the reasonable
opinion of the Lender, desirable to perfect and protect the security
interests purported to be created by the Security Agreement have been taken.
8
4.10 Subsidiaries Guaranty. Each Subsidiary Guarantor shall have duly
authorized, executed and delivered the Subsidiaries Guaranty in the form of
Exhibit F (as amended, modified or supplemented from time to time, the
"Subsidiaries Guaranty").
4.11 Financial Statements; Pro Forma Balance Sheet; Projections. The
Lender shall have received true and correct copies of the historical financial
statements, the pro forma balance sheet and the Projections referred to in
Sections 5.05(a) and (d), which historical financial statements, pro forma
balance sheet and Projections shall be in form and substance reasonably
satisfactory to the Lender.
4.12 Solvency Certificate; Insurance Certificates. The Lender shall
have received:
(i) a solvency certificate from the chief financial officer or
president of the Borrower in the form of Exhibit G; and
(ii) certificates of insurance complying with the requirements of
Section 6.03 for the business and properties of the Borrower and its
Subsidiaries, in form and substance reasonably satisfactory to the Lender
and naming the Lender as an additional insured and as loss payee, and
stating that such insurance shall not be canceled without at least 30 days
(or 10 days in the case of nonpayment of premium) prior written notice by
the insurer to the Lender.
4.13 No Default; Representations and Warranties.. (i) There shall exist
no Default or Event of Default at the time of the incurrence of the Loan and
also after giving effect thereto and (ii) all representations and warranties
contained herein and in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the Closing Date (it being understood and agreed
that any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only as
of such specified date).
The occurrence of the Closing Date and the incurrence by the Borrower
of the Loan hereunder on such date shall constitute a representation and
warranty by the Borrower to the Lender that all the conditions specified in
Section 4 exist as of that time. The Note, certificates, legal opinions and
other documents and papers referred to in Section 4 unless otherwise specified,
shall be delivered to the Lender at the Notice Office for its own account and in
sufficient counterparts or copies for the Lender and, except as otherwise
provided herein, shall be in form and substance reasonably satisfactory to the
Lender.
SECTION 5. Representations, Warranties and Agreements. In order to
induce the Lender to enter into this Agreement and to make the Loan hereunder,
the Borrower makes the following representations, warranties and agreements, in
each case as of the Closing Date and after giving effect to the Transaction, all
of which shall survive the execution and delivery of this Agreement and the
Notes and the making of the Loan, and with the occurrence of the Closing Date
and the incurrence by the Borrower of the Loan hereunder on such date being
deemed to constitute a representation and warranty that the matters specified in
this Section 5 are true and correct in all material respects on and as of the
Closing Date (it being understood and agreed that
9
any representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date).
5.01 Organizational Status. The Borrower and each of its Subsidiaries
(i) is a duly organized and validly existing corporation, partnership or limited
liability company, as the case may be, in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate, partnership or limited
liability company power and authority, as the case may be, to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where the ownership, leasing or
operation of its property or the conduct of its business requires such
qualifications except for failures to be so qualified which, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
5.02 Power and Authority. Each Credit Party has the corporate,
partnership or limited liability company power and authority, as the case may
be, to execute, deliver and perform the terms and provisions of each of the
Documents to which it is party and has taken all necessary corporate,
partnership or limited liability company action, as the case may be, to
authorize the execution, delivery and performance by it of each of such
Documents. Each Credit Party has duly executed and delivered each of the
Documents to which it is party, and each of such Documents constitutes its
legal, valid and binding obligation enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
5.03 No Violation. Neither the execution, delivery or performance by
any Credit Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
law, statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Security
Documents) upon any of the property or assets of the Borrower or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
credit agreement or loan agreement, or, except as disclosed by the Borrower in
writing to the Lender on or prior to the Closing Date, any other material
agreement, contract or instrument, in each case to which the Borrower or any of
its Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of the
certificate or articles of incorporation or by-laws (or equivalent
organizational documents) of the Borrower or any of its Subsidiaries.
5.04 Approvals. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except for (x) those
that have otherwise been obtained or made on or prior to the Closing Date and
which remain in full force and effect on the Closing Date and (y) filings which
are necessary to perfect the security interests created under the Security
Agreement, which filings will be made within ten days after the Closing Date),
or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize,
10
or is required in connection with, (i) the execution, delivery and performance
of any Document or (ii) the legality, validity, binding effect or enforceability
of any such Document (other than (x) in the case of clause (i) above in this
Section 5.04, such orders, consents, approvals, licenses, authorizations,
validations, filings, recordings and registrations required to be made after the
Closing Date in order for the Borrower to be in compliance with this Agreement,
which the Borrower will make or obtain when and as required, (y) immaterial
orders, consents, approvals, licenses, authorizations or validations required in
connection with the Sale).
5.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. (a) The consolidated balance sheets of the
Borrower for its fiscal years ended on October 1, 2000 and September 26, 1999
and for its nine-month period ended on July 1, 2001, respectively, and the
related consolidated statements of income, cash flows and shareholders' equity
of the Borrower for the fiscal years or six-month period ended on such dates, as
the case may be, copies of which have been furnished to the Lender prior to the
Closing Date, present fairly in all material respects the consolidated financial
position of the Borrower at the dates of such balance sheets and the
consolidated results of the operations of the Borrower for the periods covered
thereby. All of the foregoing financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
(except to the extent provided in the notes to such financial statements and, in
the case of the aforementioned nine month interim financial statements, except
for normal year-end audit adjustments and the absence of footnotes). The pro
forma consolidated balance sheet of the Borrower as of July 1, 2001 and after
giving effect to the Transaction and the financing therefor, a copy of which has
been furnished to the Lender prior to the Closing Date, presents fairly in all
material respects the pro forma consolidated financial position of the Borrower
as of July 1, 2001. After giving effect to the Transaction (but for this purpose
assuming that the Transaction and the related financing had occurred prior to
October 1, 2000), since October 1, 2000, there has been no change in the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or any of its Subsidiaries that has had,
or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, except as set forth in Schedule 4.07.
(b) (i) The sum of the assets, at a fair valuation, of each of the
Borrower on a stand-alone basis and the Borrower and its Subsidiaries taken as a
whole will exceed its debts, and (ii) each of the Borrower on a stand-alone
basis and the Borrower and its Subsidiaries taken as a whole has not incurred
and does not intend to incur, and does not believe that it will incur, debts
beyond its ability to pay such debts as such debts mature. For purposes of this
Section 5.05(b), "debt" means any liability on a claim, and "claim" means (a)
right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured or (b) right to an equitable
remedy for breach of performance if such breach gives rise to a payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
(c) Except as fully disclosed in the financial statements delivered
pursuant to Section 5.05(a) or as otherwise permitted by this Agreement, there
are no liabilities or obligations
11
(excluding current obligations incurred in the ordinary course and consistent
with past practice) with respect to the Borrower or any of its Subsidiaries of
any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. The Borrower does not
know of any basis for the assertion against it or any of its Subsidiaries of any
liability or obligation (excluding current obligations incurred in the ordinary
course and consistent with past practice) of any nature whatsoever that is not
fully disclosed in the financial statements delivered pursuant to Section
5.05(a) which, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(d) The Projections delivered to the Lender prior to the Closing Date
have been prepared in good faith and are based on reasonable assumptions made by
the Borrower, and there are no statements or conclusions in the Projections
which are based upon or include information known to the Borrower to be
misleading in any material respect or which fail to take into account material
information known to the Borrower regarding the matters reported therein. The
Borrower believes that the Projections are reasonable and attainable, it being
recognized by the Lender, however, that projections as to future events are not
to be viewed as facts and that the actual results during the period or periods
covered by the Projections may differ from the projected results and that the
differences may be material.
5.06 Litigation. There are no actions, suits or proceedings pending or,
to the best knowledge of the Borrower, threatened that are, either individually
or in the aggregate, reasonably likely to have a Material Adverse Effect.
5.07 True and Complete Disclosure. All factual information (taken as a
whole) furnished by or on behalf of the Borrower in writing to the Lender
(including, without limitation, all information contained in the Documents) for
purposes of or in connection with this Agreement, the other Credit Documents or
any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of the
Borrower in writing to the Lender will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. It is understood
and agreed that the Projections, the pro forma balance sheet required to be
delivered pursuant to Section 4.11 and the budgets required to be delivered
under Section 6.01(e) are not factual information for purposes of this Section
5.07.
5.08 Use of Proceeds; Margin Regulations. (a) All proceeds of the Loan
will be used by the Borrower for (i) working capital purposes of the Borrower or
Subsidiary Guarantors of the Borrower or (ii) capital expenditures for the
direct and immediate benefit of the Borrower or Subsidiary Guarantors of the
Borrower.
(b) No part of the Loan (or the proceeds thereof) will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of the Loan nor the
use of the proceeds thereof will violate or be
12
inconsistent with the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
5.09 Tax Returns and Payments. Each of the Borrower and each of its
Subsidiaries has timely filed or caused to be timely filed all federal and state
income tax returns and all other material tax returns, domestic and foreign,
required to be filed by it and has paid all taxes and assessments payable by it
which have become due, except for immaterial taxes and taxes that are being
contested in good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles. There is no action,
suit, proceeding, investigation, audit, or claim now pending or, to the best
knowledge of the Borrower threatened, by any authority regarding any taxes
relating to the Borrower or any of its Subsidiaries that either individually or
in the aggregate could reasonably be expected to result in a material liability
to the Borrower or any of its Subsidiaries. Neither the Borrower nor any of its
Subsidiaries has entered into an agreement or waiver or been requested to enter
into an agreement or waiver extending any statute of limitations relating to the
payment or collection of taxes of the Borrower or any of its Subsidiaries, or is
aware of any circumstances that would cause the taxable years or other taxable
periods of the Borrower or any of its Subsidiaries not to be subject to the
normally applicable statute of limitations. Neither the Borrower nor any of its
Subsidiaries has provided, with respect to themselves or property held by them,
any consent under Section 341 of the Code. Neither of the Borrower nor any of
its Subsidiaries has incurred, or will incur, any material tax liability in
connection with the Transaction.
5.10 Compliance with ERISA. (i) Schedule III sets forth the name of
each Plan. Each Plan (and each related trust, insurance contract or fund) is in
substantial compliance with its terms and with all applicable laws, including,
without limitation, ERISA and the Code; the Borrower is not aware of any reason
why each Plan (and each related trust, if any) which is intended to be qualified
under Section 401(a) of the Code would not receive a determination letter from
the Internal Revenue Service to the effect that it meets the requirements of
Sections 401(a) and 501(a) of the Code if an application for such a letter were
made; no Reportable Event has occurred; no Plan which is a multiemployer plan
(as defined in Section 4001(a)(3) of ERISA) is insolvent or in reorganization;
no Plan has an Unfunded Current Liability which, when added to the aggregate
amount of Unfunded Current Liabilities with respect to all other Plans, exceed
$500,000; no Plan which is subject to Section 412 of the Code or Section 302 of
ERISA has an accumulated funding deficiency, within the meaning of such sections
of the Code or ERISA, or has applied for or received a waiver of an accumulated
funding deficiency or an extension of any amortization period, within the
meaning of Section 412 of the Code or Section 303 or 304 of ERISA; all
contributions required to be made with respect to a Plan have been timely made;
neither the Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate
has incurred any material liability (including any indirect, contingent or
secondary liability) to or on account of a Plan pursuant to Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code or expects to incur any such material
liability under any of the foregoing sections with respect to any Plan (other
than liabilities of any ERISA Affiliate which could not by operation of law or
otherwise become a liability of the Borrower or any of its Subsidiaries); no
condition exists which presents a material risk to the Borrower or any
Subsidiary of the Borrower or any ERISA Affiliate of incurring a material
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code;
13
no proceedings have been instituted to terminate or appoint a trustee to
administer any Plan which is subject to Title IV of ERISA; no action, suit,
proceeding, hearing, audit or investigation with respect to the administration,
operation or the investment of assets of any Plan (other than routine claims for
benefits) is pending, expected or threatened; using actuarial assumptions and
computation methods consistent with Part 1 of subtitle E of Title IV of ERISA,
the aggregate liabilities of the Borrower and its Subsidiaries and its ERISA
Affiliates to all Plans which are multiemployer plans (as defined in Section
4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Plan, would not exceed
$500,000; each group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) which covers or has covered employees or former
employees of the Borrower, any Subsidiary of the Borrower, or any ERISA
Affiliate has at all times been operated in material compliance with the
provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the
Code; no lien imposed under the Code or ERISA on the assets of the Borrower or
any Subsidiary of the Borrower or any ERISA Affiliate exists or is likely to
arise on account of any Plan; and the Borrower and its Subsidiaries may cease
contributions to or terminate any employee benefit plan maintained by any of
them without incurring any material liability.
(ii) The Borrower and its Subsidiaries have not entered into any
Foreign Pension Plan, nor have incurred any obligation(s) pursuant to any
Foreign Pension Plan.
5.11 The Security Documents. The provisions of the Security Agreement
are effective to create in favor of the Lender a legal, valid and enforceable
security interest in all right, title and interest of the Credit Parties in the
Security Agreement Collateral described therein, and, subject to Section
6.10(d), the Lender has (or within 10 days following the Closing Date will have)
a fully perfected first lien on, and security interest in, all right, title and
interest in all of the Security Agreement Collateral described therein, subject
to no other Liens other than Permitted Liens.
5.12 Representations and Warranties in the Documents. All
representations and warranties set forth in the other Documents (other than the
Credit Documents) were true and correct in all material respects at the time as
of which such representations and warranties were made (or deemed made) and
shall be true and correct in all material respects as of the Closing Date as if
such representations and warranties were made on and as of such date, unless
stated to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date, except to the extent that the failure of any such representation
or warranty to be true and current in all material respects, either individually
or in the aggregate, could not reasonably be expected to have Material Adverse
Effect.
5.13 Properties. All Real Property owned or leased by the Borrower or
any Subsidiary Guarantors, and the nature of the interest therein, is correctly
set forth in Schedule IV. Each of the Borrower and each Subsidiary Guarantor has
good and marketable title to all material properties owned by it, including all
material property reflected in Schedule IV and in the most recent historical
balance sheet referred to in Section 5.05(a) (except as sold or otherwise
disposed of since the date of such balance sheet in the ordinary course of
business or as permitted by the terms of this Agreement), free and clear of all
Liens, other than Permitted Liens.
14
5.14 Capitalization; Newly Issued Securities. (a) The authorized
capital stock of the Borrower consist, of (i) 100,000,000 shares of common
stock, $0.01 par value per share, of which 28,069,282 (after giving effect to
the issuance contemplated by the Sale Documents) shares shall be issued and
outstanding, and (ii) 1,000 shares of preferred stock, $.01 par value per share,
of which none are issued and outstanding. All outstanding shares of the capital
stock of the Borrower have been duly and validly issued and are fully paid and
non-assessable. The Borrower does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreement providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock, except
for options, warrants and rights to purchase shares of the Borrower's common
stock which have been issued.
(b) The shares of equity securities to be issued upon conversion of the
Note (the "Conversion Shares") have been duly authorized and validly reserved
for issuance in contemplation of conversion of the Note pursuant to Section 10
hereof and, when issued and delivered in accordance with this Agreement, will
have been validly issued, fully paid and non-assessable. The Lender will acquire
good and marketable title to the Conversion Shares upon conversion of the Note
pursuant to Section 10 hereof, free and clear of any and all Liens, except such
Liens as may exist under the Credit Documents.
5.15 Subsidiaries. The Borrower has no Subsidiaries other than those
Subsidiaries listed on Schedule V. Schedule V correctly sets forth the
percentage ownership (direct or indirect) of the Borrower in each class of
capital stock or other equity of its Subsidiaries and also identifies the direct
owner thereof.
5.16 Compliance with Statutes, etc. Each of the Borrower and each of
its Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (including, without limitation, applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliances as could not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
5.17 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
5.18 Public Utility Holding Company Act. Neither the Borrower nor any
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
5.19 Environmental Matters. (a) Each of the Borrower and each of its
Subsidiary Guarantors is in compliance with all applicable Environmental Laws
and the requirements of any permits issued under such Environmental Laws. There
are no pending or, to the best knowledge of the Borrower, threatened
Environmental Claims against the Borrower or any of its Subsidiary
15
Guarantors or any Real Property owned, leased or operated by the Borrower or any
of its Subsidiary Guarantors (including any such claim arising out of the
ownership, lease or operation by the Borrower or any of its Subsidiary
Guarantors of any Real Property formerly owned by the Borrower or any of its
Subsidiary Guarantors but no longer owned, leased or operated by the Borrower or
any of its Subsidiary Guarantors). There are no facts, circumstances, conditions
or occurrences with respect to the business or operations of the Borrower or any
of its Subsidiary Guarantors, or any Real Property owned, leased or operated by
the Borrower or any of its Subsidiary Guarantors (including, to the best
knowledge of the Borrower, any Real Property formerly owned, leased or operated
by the Borrower or any of its Subsidiary Guarantors but no longer owned, leased
or operated by the Borrower or any of its Subsidiary Guarantors) or, to the best
knowledge of the Borrower, any property adjoining or adjacent to any such Real
Property that could be reasonably expected (i) to form the basis of an
Environmental Claim against the Borrower or any of its Subsidiary Guarantors or
any Real Property owned, leased or operated by the Borrower or any of its
Subsidiary Guarantors or (ii) to cause any Real Property owned, leased or
operated by the Borrower or any of its Subsidiary Guarantors to be subject to
any restrictions on the ownership, lease, occupancy or transferability of such
Real Property by the Borrower or any of its Subsidiary Guarantors under any
applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned, leased
or operated by the Borrower or any of its Subsidiary Guarantors where such
generation, use, treatment, storage or transportation has violated or could
reasonably be expected to violate any Environmental Law or give rise to an
Environmental Claim. Hazardous Materials have not at any time been Released on
or from any Real Property owned, leased or operated by the Borrower or any of
its Subsidiary Guarantors where such Release has violated or could reasonably be
expected to violate any applicable Environmental Law.
(c) Notwithstanding anything to the contrary in this Section 5.19, the
representations and warranties made in this Section 5.19 shall not be untrue
unless the effect of any or all conditions, violations, claims, restrictions,
failures and non-compliances of the types described above could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
5.20 Labor Relations. Neither the Borrower nor any of its Subsidiaries
is engaged in any unfair labor practice that could reasonably be expected to,
either individually or in the aggregate, have a Material Adverse Effect. There
is (i) no unfair labor practice complaint pending against the Borrower or any of
its Subsidiaries or, to the best knowledge of the Borrower, threatened against
any of them, before the National Labor Relations Board, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Borrower or any of its Subsidiaries or, to
the best knowledge of the Borrower, threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage pending against the Borrower or any
of its Subsidiaries or, to the best knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries and (iii) no union
representation question exists with respect to the employees of the Borrower or
any of its Subsidiaries, except (with respect to any matter specified in clause
(i), (ii) or (iii) above, either individually or in the aggregate) such as could
not reasonably be expected to have a Material Adverse Effect.
16
5.21 Patents, Licenses, Franchises and Formulas. Each of the Borrower
and each of its Subsidiaries owns or has the right to use all the patents,
trademarks, permits, service marks, trade names, copyrights, licenses,
franchises, proprietary information (including but not limited to rights in
computer programs and databases) and formulas, or rights with respect to the
foregoing, and has obtained assignments of all leases, licenses and other rights
of whatever nature, necessary for the present conduct of its business, without
any known conflict with the rights of others which, or the failure to obtain
which, as the case may be, could reasonably be expected, either individually or
in the aggregate, to result in a Material Adverse Effect.
5.22 Indebtedness. Schedule VI sets forth a true and complete list of
all Indebtedness (including Contingent Obligations) of the Borrower and its
Subsidiaries which is to remain outstanding after giving effect to the
Transaction (excluding the Loan, the "Existing Indebtedness"), in each case
showing the aggregate principal amount thereof and the name of the respective
borrower and the Borrower or any of its Subsidiaries which directly or
indirectly guarantees such debt.
5.23 Transaction. At the time of consummation thereof, the Transaction
shall have been consummated in all material respects in accordance with the
terms of the respective Documents and all applicable laws. At the time of
consummation thereof, all consents and approvals of, and filings and
registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required in order to consummate the
Transaction have been obtained, given, filed or taken and are or will be in full
force and effect (or effective judicial relief with respect thereto has been
obtained) (other than as expressly set forth in Section 5.04). All applicable
waiting periods with respect thereto have or, prior to the time when required,
will have, expired without, in all such cases, any action being taken by any
competent authority which restrains, prevents, or imposes material adverse
conditions upon the Transaction. Additionally, there does not exist any
judgment, order or injunction prohibiting or imposing material adverse
conditions upon the Transaction, or the incurrence of the Loan hereunder or the
performance by any Credit Party of its obligations under the Documents to which
it is party.
5.24 Insurance. Schedule VII sets forth a true and complete listing of
all insurance maintained by the Borrower and its Subsidiaries, with the amounts
insured (and any deductibles) set forth therein.
SECTION 6. Affirmative Covenants. The Borrower hereby covenants and
agrees that on and after the Closing Date and until the Loan and the Note
(together with interest thereon), and all other Obligations (other than
indemnities described in Section 11.12 which are not then due and payable)
incurred hereunder and thereunder, are paid in full:
6.01 Information Covenants. The Borrower will furnish to the Lender:
(a) Monthly Reports. Within 30 days after the end of each fiscal month
of the Borrower (commencing with its fiscal month ending on August 26, 2001),
the consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal month and the related consolidated
statements of income and statement of cash flows for such fiscal month and for
the elapsed portion of the fiscal year ended with the last day of such fiscal
month,
17
in each case setting forth comparative figures for the corresponding fiscal
month in the prior fiscal year and comparable budgeted figures for such fiscal
month, all of which shall be certified by the chief financial officer of the
Borrower that they fairly present in all material respects in accordance with
generally accepted accounting principles the financial condition of the Borrower
and its Subsidiaries as of the dates indicated and the results of their
operations for the periods indicated, subject to normal year-end audit
adjustments and the absence of footnotes.
(b) Quarterly Financial Statements. Within 45 days after the close of
the first three quarterly accounting periods in each fiscal year of the
Borrower, (i) the consolidated and consolidating balance sheet of the Borrower
and its Subsidiaries as at the end of such quarterly accounting period and the
related consolidated and consolidating statements of income and retained
earnings, and (in any event) the related statement of cash flows for such
quarterly accounting period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly accounting period, in each case setting
forth comparative figures for the related periods in the prior fiscal year, all
of which shall be certified by the chief financial officer of the Borrower that
they fairly present in all material respects in accordance with generally
accepted accounting principles the financial condition of the Borrower and its
Subsidiaries as of the dates indicated and the results of their operations for
the periods indicated, subject to normal year-end audit adjustments and the
absence of footnotes, and (ii) management's brief discussion and analysis of the
important operational and financial developments during such quarterly
accounting period.
(c) Annual Financial Statements. Within 90 days after the close of each
fiscal year of the Borrower, (i) the consolidated and consolidating balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income and retained earnings and
statement of cash flows for such fiscal year setting forth comparative figures
for the preceding fiscal year and certified by Deloitte & Touche, LLP, any "Big
Five" independent certified public accounting firm or any other independent
certified public accountants of recognized national standing reasonably
acceptable to the Lender, together with a report of such accounting firm stating
that in the course of its regular audit of the financial statements of the
Borrower and its Subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm obtained no
knowledge of any Default or an Event of Default insofar as such Default or Event
of Default relates to financial or accounting matters which has occurred and is
continuing or, if in the opinion of such accounting firm such a Default or Event
of Default has occurred and is continuing, a statement as to the nature thereof,
and (ii) management's discussion and analysis of the important operational and
financial developments during such fiscal year.
(d) Management Letters. Promptly after the Borrower's or any of its
Subsidiaries' receipt thereof, a copy of any "management letter" received from
its certified public accountants and management's response thereto.
(e) Budgets. No later than 30 days following the first day of each
fiscal year of the Borrower, a budget in form reasonably satisfactory to the
Lender (including budgeted statements of income, sources and uses of cash and
balance sheets) prepared by the Borrower for each of the twelve months of such
fiscal year prepared in detail, in each case setting forth, with appropriate
discussions, the principal assumptions upon which such budgets are based.
18
(f) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 6.01(a), (b) and (c), a certificate
of the chief financial officer of the Borrower certifying on behalf of the
Borrower that, to the best of such officer's knowledge, no Default or Event of
Default has occurred and is continuing or, if any Default or Event of Default
has occurred and is continuing, specifying the nature and extent thereof, which
certificate shall (i) set forth in reasonable detail the calculations required
to establish whether the Borrower and its Subsidiaries were in compliance with
the provisions of Sections 7.02(iv), 7.03(iii), 7.04(iv), 7.04(viii), 7.05(v),
7.05(xiv) and 7.07, at the end of such fiscal quarter or year, as the case may
be (it being understood that the calculations to determine compliance with each
of the respective clauses under any of such Sections 7.02, 7.03, 7.04 and 7.05
need only set forth the aggregate amount of transactions that have occurred
during the respective reporting period under each such clause), and (ii) certify
that there have been no changes to Annexes A through E of the Security Agreement
since the Closing Date or, if later, since the date of the most recent
certificate delivered pursuant to this Section 6.01(f), or if there have been
any such changes, a list in reasonable detail of such changes.
(g) Notice of Default, Litigation and Material Adverse Effect.
Promptly, and in any event within five Business Days after any officer of the
Borrower obtains knowledge thereof, notice of (i) the occurrence of any event
which constitutes a Default or an Event of Default, or (ii) any litigation or
governmental investigation or proceeding pending against the Borrower or any of
its Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
(h) Other Reports and Filings. Promptly after the filing or delivery
thereof, copies of all financial information, proxy materials and reports, if
any, which the Borrower or any of its Subsidiary Guarantors shall publicly file
with the Securities and Exchange Commission or any successor thereto (the "SEC")
or deliver to holders (or any trustee, agent or other representative therefor)
of its material Indebtedness (excluding Capitalized Lease Obligations and
purchase money Indebtedness incurred pursuant to Section 7.04(iv)) pursuant to
the terms of the documentation governing such material Indebtedness.
(i) Environmental Matters. Promptly after any officer of the Borrower
obtains knowledge thereof, notice of one or more of the following environmental
matters, unless such environmental matters could not, either individually or
when aggregated with all other such environmental matters, be reasonably
expected to have a Material Adverse Effect:
(i) any pending or threatened Environmental Claim against the Borrower
or any of its Subsidiary Guarantors or any Real Property owned, leased or
operated by the Borrower or any of its Subsidiary Guarantors;
(ii) any condition or occurrence on or arising from any Real Property
owned, leased or operated by the Borrower or any of its Subsidiary
Guarantors that (a) results in noncompliance by the Borrower or any of its
Subsidiary Guarantors with any applicable Environmental Law or (b) could be
expected to form the basis of an Environmental Claim against the Borrower or
any of its Subsidiary Guarantors or any such Real Property;
19
(iii) any condition or occurrence on any Real Property owned, leased or
operated by the Borrower or any of its Subsidiary Guarantors that could be
expected to cause such Real Property to be subject to any restrictions on
the ownership, lease, occupancy, use or transferability by the Borrower or
any of its Subsidiary Guarantors of such Real Property under any
Environmental Law; and
(iv) the taking of any removal or remedial action in response to the
actual or alleged presence of any Hazardous Material on any Real Property
owned, leased or operated by the Borrower or any of its Subsidiary
Guarantors as required by any Environmental Law or any governmental or other
administrative agency; provided that in any event the Borrower shall deliver
to the Lender all notices received by the Borrower or any of its Subsidiary
Guarantors from any government or governmental agency under, or pursuant to,
CERCLA which identify the Borrower or any of its Subsidiary Guarantors as
potentially responsible parties for redemption costs or which otherwise
notify the Borrower or any of its Subsidiary Guarantors of potential
liability under CERCLA.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower's or such Subsidiary's response thereto.
(j) Other Information. From time to time, such other information or
documents (financial or otherwise) with respect to the Borrower or any of its
Subsidiaries as the Lender may reasonably request.
6.02 Books, Records and Inspections. The Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and accounts in which
full, true and correct entries in conformity with generally accepted accounting
principles and all requirements of law shall be made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiary Guarantors to, permit officers and designated
representatives of the Lender to visit and inspect, under guidance of officers
of the Borrower or such Subsidiary, any of the properties of the Borrower or
such Subsidiary (although, so long as no Default or Event of Default then exists
and is continuing, the Lender may not conduct more than two such visits in any
fiscal year of the Borrower), and to examine the books of account of the
Borrower or such Subsidiary and discuss the affairs, finances and accounts of
the Borrower or such Subsidiary with, and be advised as to the same by, its and
their officers and independent accountants (so long as the Borrower is afforded
an opportunity to be present), all upon reasonable prior notice and at such
reasonable times as the Lender may reasonably request
6.03 Maintenance of Property; Insurance. (a) The Borrower will, and
will cause each of its Subsidiaries to, (i) keep all property necessary to the
business of the Borrower and its Subsidiaries in reasonably good working order
and condition, ordinary wear and tear and damage by casualty excepted, (ii)
maintain with financially sound and reputable insurance companies insurance on
all such property in at least such amounts and against at least such risks as is
consistent and in accordance with industry practice for companies similarly
situated owning similar properties in the same general areas in which the
Borrower or any of its Subsidiaries operates, and (iii) furnish to the Lender
full information as to the insurance carried. At any time
20
that insurance at or above the levels described on Schedule VII is not being
maintained by the Borrower or any Subsidiary of the Borrower, the Borrower will,
or will cause one of its Subsidiaries to, promptly notify the Lender in writing
and, if thereafter reasonably requested by the Lender to do so, the Borrower or
any such Subsidiary, as the case may be, shall obtain such insurance at such
levels and coverage which are at least as great as those described in Schedule
VII to the extent such insurance is available at commercially reasonable rates.
(b) The Borrower will, and will cause each of its Subsidiary Guarantors
to, at all times keep its property insured in favor of the Lender, and all
policies or certificates (or certified copies thereof) with respect to such
insurance (and any other insurance maintained by the Borrower and/or such
Subsidiary Guarantors (i) shall be endorsed to the Lender's reasonable
satisfaction for the benefit of the Lender (including, without limitation, by
naming the Lender as loss payee and/or additional insured), (ii) shall state
that such insurance policies shall not be canceled without at least 30 days' (or
10 days, in the case of nonpayment of premium) prior written notice thereof by
the respective insurer to the Lender and (iii) shall be deposited with the
Lender.
(c) If the Borrower or any of its Subsidiary Guarantors shall fail to
insure its property in accordance with this Section 6.03, or if the Borrower or
any of its Subsidiary Guarantors shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Lender shall have the right
(but shall be under no obligation) to procure such insurance and the Borrower
agrees to reimburse the Lender for all reasonable costs and expenses of
procuring such insurance.
6.04 Existence; Franchises. The Borrower will, and will cause each of
its Subsidiaries to, do or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights,
franchises, licenses and patents; provided, however, that nothing in this
Section 6.04 shall prevent (i) sales of assets and other transactions by the
Borrower or any of its Subsidiaries in accordance with Section 7.02 or (ii) the
withdrawal by the Borrower or any of its Subsidiaries of its qualification as a
foreign corporation in any jurisdiction where such withdrawal could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.05 Compliance with Statutes, etc. The Borrower will, and will cause
each of its Subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls), except such
noncompliances as could not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
6.06 Compliance with Environmental Laws. (a) The Borrower will comply,
and will cause each of its Subsidiaries to comply, with all Environmental Laws
and permits applicable to, or required by, the ownership, lease or use of its
Real Property now or hereafter owned, leased or operated by the Borrower or any
of its Subsidiaries, except such non-compliances as could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect,
21
and will promptly pay or cause to be paid all costs and expenses incurred in
connection with such compliance, and will keep or cause to be kept all such Real
Property free and clear of any Liens imposed pursuant to such Environmental
Laws. Neither the Borrower nor any of its Subsidiaries will generate, use,
treat, store, Release or dispose of, or permit the generation, use, treatment,
storage, Release or disposal of Hazardous Materials on any Real Property now or
hereafter owned, leased or operated by the Borrower or any of its Subsidiaries,
or transport or permit the transportation of Hazardous Materials to or from any
such Real Property, except for Hazardous Materials generated, used, treated,
stored, Released or disposed of at any such Real Properties in compliance in all
material respects with all applicable Environmental Laws and as required in
connection with the normal operation, use and maintenance of the business or
operations of the Borrower or any of its Subsidiaries.
(b) (i) After the receipt by the Lender of any notice of the type
described in Section 6.01(i), (ii) at any time that the Borrower or any of its
Subsidiary Guarantors are not in compliance with Section 6.06(a) or (b) or (iii)
in the event that the Lender shall have exercised any of its remedies pursuant
to the last paragraph of Section 8, the Borrower will (in each case) provide, at
the sole expense of the Borrower and upon the request of the Lender, an
environmental site assessment report concerning any Real Property owned, leased
or operated by the Borrower or any of its Subsidiary Guarantors, prepared by an
environmental consulting firm reasonably approved by the Lender, indicating the
presence or absence of Hazardous Materials and the potential cost of any removal
or remedial action in connection with such Hazardous Materials on such Real
Property. If the Borrower fails to provide same within 90 days after such
request was made, the Lender may order the same, the cost of which shall be
borne by the Borrower and the Borrower shall grant and hereby grant to the
Lender and its agents access to such Real Property and specifically grant the
Lender an irrevocable non-exclusive license, subject to the rights of tenants,
to undertake such an assessment at any reasonable time upon reasonable notice to
the Borrower, all at the sole expense of the Borrower.
6.07 ERISA. As soon as possible and, in any event, within ten (10) days
after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows
or has reason to know of the occurrence of any of the following, the Borrower
will deliver to the Lender a certificate of the chief financial officer of the
Borrower setting forth in reasonable detail information as to such occurrence
and the action, if any, that the Borrower, such Subsidiary or such ERISA
Affiliate is required or proposes to take, together with any notices received by
or required or proposed to be given to or filed with or by the Borrower, the
Subsidiary, the ERISA Affiliate, the PBGC or any other governmental agency, a
Plan participant or the Plan administrator with respect thereto: that a
Reportable Event has occurred (except to the extent that the Borrower has
previously delivered to the Lender a certificate and notices (if any) concerning
such event pursuant to the next clause hereof); that a contributing sponsor (as
defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA
is subject to the advance reporting requirement of PBGC Regulation Section
4043.61 (without regard to subparagraph (b)(1) thereof), and an event described
in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section
4043 is reasonably expected to occur with respect to such Plan within the
following 30 days; that an accumulated funding deficiency, within the meaning of
Section 412 of the Code or Section 302 of ERISA, has been incurred or an
application may be or has been made for a waiver or modification of the minimum
funding standard (including any required installment payments) or an extension
of any
22
amortization period under Section 412 of the Code or Section 303 or 304 of ERISA
with respect to a Plan; that any contribution required to be made with respect
to a Plan or Foreign Pension Plan has not been timely made; that a Plan has been
or may be terminated, reorganized, partitioned or declared insolvent under Title
IV of ERISA; that a Plan has an Unfunded Current Liability which, when added to
the aggregate amount of Unfunded Current Liabilities with respect to all other
Plans, exceed $500,000; that proceedings may be or have been instituted to
terminate or appoint a trustee to administer a Plan which is subject to Title IV
of ERISA; that a proceeding has been instituted pursuant to Section 515 of ERISA
to collect a delinquent contribution to a Plan; that the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate will or may incur any material
liability (including any indirect, contingent, or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(i) or
502(l) of ERISA or with respect to a group health plan (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the
Code; or that the Borrower or any Subsidiary of the Borrower may incur any
material liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any Plan or
any Foreign Pension Plan. The Borrower will deliver to the Lender copies of any
records, documents or other information that must be furnished to the PBGC with
respect to any Plan pursuant to Section 4010 of ERISA. The Borrower will also
deliver, upon the request of the Lender, a complete copy of the annual report
(on Internal Revenue Service Form 5500-series) of each Plan (including, to the
extent required, the related financial and actuarial statements and opinions and
other supporting statements, certifications, schedules and information) required
to be filed with the Internal Revenue Service. In addition to any certificates
or notices delivered to the Lender pursuant to the first sentence hereof, copies
of any material records, documents or other information required to be furnished
to the PBGC or any other governmental agency, and any material notices received
by the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate with
respect to any Plan or Foreign Pension Plan shall be delivered to the Lender no
later than ten (10) days after the date such records, documents and/or
information has been furnished to the PBGC or any other governmental agency or
such notice has been received by the Borrower, the respective Subsidiary or the
ERISA Affiliate, as applicable. The Borrower and each of its applicable
Subsidiaries shall insure that all Foreign Pension Plans administered by it or
into which it makes payments obtains or retains (as applicable) registered
status under and as required by applicable law and is administered in a timely
manner in all respects in compliance with all applicable laws except where the
failure to do any of the foregoing could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
6.08 End of Fiscal Years; Fiscal Quarters. The Borrower will cause (i)
each of its, and each of its Subsidiaries', fiscal years to end on the Sunday
following the last Friday of September of each year and (ii) each of its, and
each of its Subsidiaries', fiscal quarters to end on the appropriate Sunday at
the end of each fiscal quarter of each year.
6.09 Performance of Obligations. The Borrower will, and will cause each
of its Subsidiaries to, perform all of its obligations under the terms of each
mortgage, indenture, security agreement, loan agreement or credit agreement and
each other material agreement,
23
contract or instrument by which it is bound, except such non-performances as
could not, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
6.10 Additional Security; Further Assurances. (a) In the event of any
material decrease in the value of the collateral securing the Loan, the Borrower
will, and will cause each of the Subsidiary Guarantors to, grant to the Lender
security interests in such assets and properties of the Borrower and the
Subsidiary Guarantors as are not covered by the original Security Documents, and
as may be reasonably requested from time to time by the Lender (collectively,
the "Additional Security Documents"). All such security interests shall be
granted pursuant to documentation reasonably satisfactory in form and substance
to the Lender and shall constitute valid and enforceable perfected security
interests superior to and prior to the rights of all third Persons and subject
to no other Liens except for Permitted Liens. The Additional Security Documents
or instruments related thereto shall have been duly recorded or filed in such
manner and in such places as are required by law to establish, perfect, preserve
and protect the Liens in favor of the Lender required to be granted pursuant to
the Additional Security Documents and all taxes, fees and other charges payable
in connection therewith shall have been paid in full.
(b) The Borrower will, and will cause each of its Subsidiary Guarantors
to, at the expense of the Borrower, make, execute, endorse, acknowledge, file
and/or deliver to the Lender from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, real property surveys, reports,
landlord waivers and other assurances or instruments and take such further steps
relating to the Collateral covered by any of the Security Documents as the
Lender may reasonably require. Furthermore, the Borrower will cause to be
delivered to the Lender such opinions of counsel, title insurance and other
related documents as may be reasonably requested by the Lender to assure itself
that this Section 6.10 has been complied with.
(c) The Borrower agrees that each action required above by this Section
6.10 shall be completed as soon as possible, but in no event later than 90 days
after such action is either requested to be taken by the Lender or required to
be taken by the Borrower and/or its Subsidiary Guarantors pursuant to the terms
of this Section 6.10; provided that, in no event will the Borrower or any of its
Subsidiary Guarantors be required to take any action, other than using its
reasonable best efforts, to obtain consents from third parties with respect to
its compliance with this Section 6.10.
(d) As promptly as practicable after the Closing, but in no event more
than 14 calendar days after the Closing, the Borrower shall cause each relevant
Assignor (as defined in the Security Agreement) to have duly authorized,
executed and delivered the Control Agreement in the form of Exhibit J (as
amended, modified or supplemented from time to time, the "Control Agreement")
and delivered the same to the Lender, with the effect that the Lender shall at
that point have a perfected, first priority Lien on the Bank Account, subject to
no other Liens other than Permitted Liens.
6.11 Disposition. The Borrower will use its reasonable best efforts to
consummate the Disposition on or prior to September 20, 2001 and will cause the
acquirer of the assets sold or otherwise transferred pursuant to the
Disposition, to pay, upon the earlier of (x) the
24
closing of the Disposition or (y) the transfer of ownership in the assets sold
or otherwise transferred to the acquirer pursuant to the Disposition, directly
to the Lender, that portion of the sale proceeds of the Disposition which equals
the outstanding principal amount of the Loan (together with outstanding accrued
but unpaid interest thereon) at such time.
6.12 Use of Proceeds. The Borrower will use the proceeds of the Loan
only as provided in Section 5.08.
SECTION 7. Negative Covenants. The Borrower hereby covenants and agrees
that on and after the Closing Date and until the Loan and Notes (together with
interest thereon), and all other Obligations (other than any indemnities
described in Section 11.12 which are not then due and payable) incurred
hereunder and thereunder, are paid in full:
7.01 Liens. The Borrower will not, and will not permit any of its
Subsidiary Guarantors to, create, incur, assume or suffer to exist any Lien upon
or with respect to any property or assets (real or personal, tangible or
intangible) of the Borrower or any of its Subsidiary Guarantors, whether now
owned or hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable with recourse to the Borrower
or any of its Subsidiary Guarantors), or assign any right to receive income or
permit the filing of any financing statement under the UCC or any other similar
notice of Lien under any similar recording or notice statute; provided that the
provisions of this Section 7.01 shall not prevent the creation, incurrence,
assumption or existence of the following (Liens described below are herein
referred to as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes, assessments or governmental charges
or levies being contested in good faith and by appropriate proceedings for
which adequate reserves have been established in accordance with generally
accepted accounting principles;
(ii) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and (x) which do
not in the aggregate materially detract from the value of the Borrower's or
such Subsidiary's property or assets or materially impair the use thereof in
the operation of the business of the Borrower or such Subsidiary or (y)
which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or assets subject to any such Lien;
(iii) Liens in existence on the Closing Date which are listed, and the
property subject thereto described, in Schedule VIII, but only to the
respective date, if any, set forth in such Schedule VIII for the removal,
replacement and termination of any such Liens, plus renewals, replacements
and extensions of such Liens to the extent set forth on such Schedule VIII,
provided that (x) the aggregate principal amount of the Indebtedness, if
any, secured by such Liens does not increase from that amount outstanding at
the time
25
of any such renewal, replacement or extension and (y) any such renewal,
replacement or extension does not encumber any additional assets or
properties of the Borrower or any of its Subsidiaries;
(iv) Liens created pursuant to this Agreement and the Security
Documents;
(v) licenses, sublicenses, leases or subleases granted to other Persons
not materially interfering with the conduct of the business of the Borrower
or any of its Subsidiaries;
(vi) Liens upon assets of the Borrower or any of its Subsidiaries
subject to Capitalized Lease Obligations to the extent such Capitalized
Lease Obligations are permitted by Section 7.04(iv), provided that (x) such
Liens only serve to secure the payment of Indebtedness arising under such
Capitalized Lease Obligation and (y) the Lien encumbering the asset giving
rise to the Capitalized Lease Obligation does not encumber any other asset
of the Borrower or any Subsidiary of the Borrower;
(vii) Liens placed upon equipment, machinery or other assets (other
than inventory, receivables and intellectual property) acquired after the
Closing Date and used in the ordinary course of business of the Borrower or
any of its Subsidiaries at the time of the acquisition thereof by the
Borrower or any such Subsidiary or within 90 days thereafter to secure
Indebtedness incurred to pay all or a portion of the purchase price thereof
or to secure Indebtedness incurred solely for the purpose of financing the
acquisition of any such equipment, machinery or other assets or extensions,
renewals or replacements of any of the foregoing for the same or a lesser
amount, provided that (x) the Indebtedness secured by such Liens is
permitted by Section 7.04(iv) and (y) in all events, the Lien encumbering
the equipment, machinery or other assets so acquired does not encumber any
other asset of the Borrower or such Subsidiary;
(viii) municipal and zoning ordinances, easements, rights-of-way,
restrictions, encroachments and other similar charges or encumbrances, and
minor title deficiencies, in each case not securing Indebtedness and not
materially interfering with the conduct of the business of the Borrower or
any of its Subsidiaries;
(ix) Liens arising from precautionary UCC financing statement filings
regarding operating leases;
(x) Liens arising out of the existence of judgments or awards in
respect of which the Borrower or any of its Subsidiaries shall in good faith
be prosecuting an appeal or proceedings for review and in respect of which
there shall have been secured a subsisting stay of execution pending such
appeal or proceedings, provided that the aggregate amount of all cash and
the fair market value of all other property subject to such Liens does not
exceed $1,000,000 at any time outstanding;
(xi) statutory and common law landlords' liens under leases to which
the Borrower or any of its Subsidiaries is a party;
26
(xii) Liens (other than Liens imposed under ERISA) incurred in the
ordinary course of business in connection with workers compensation claims,
unemployment insurance and social security benefits and Liens securing the
performance of bids, tenders, leases and contracts in the ordinary course of
business, statutory obligations, surety bonds, performance bonds, customs
bonds and other obligations of a like nature (other than appeal bonds)
incurred in the ordinary course of business and return-of-money (exclusive
of obligations in respect of the payment for borrowed money), provided that
the aggregate amount of all cash and the fair market value of all other
property subject to all Liens permitted by this clause (xii) shall not at
any time exceed $1,000,000, although no more than $500,000 of such
collateral may be in the form of cash at any one time;
(xiii) Liens in favor of customs and revenue authorities which secure
payment of customs duties in connection with the importation of goods;
(xiv) Liens consisting of rights of set-off of a customary nature or
bankers' liens on amounts on deposit, whether arising by contract or
operation of law, incurred in the ordinary course of business;
(xv) any interest or title of a licensor, lessor or sublessor under any
license or lease permitted by this Agreement;
(xvi) Liens on insurance proceeds securing unpaid premiums incurred in
connection with the financing of insurance premiums; and
(xvii) other Liens incidental to the conduct of the business of the
Borrower or any of its Subsidiaries that (i) were not incurred in connection
with Indebtedness, (ii) do not materially detract from the value of the
assets subject to such Liens or materially impair the use thereof in the
operation of such business (although to the extent that any such Liens
attach to any Collateral, such Liens shall be junior to the Liens created in
favor of the Lender and (iii) do not encumber cash and other property with a
value in excess of, and do not secure obligations in excess of, $3,000,000
in the aggregate for all such Liens at any time outstanding.
7.02 Consolidation, Merger, Purchase or Sale of Assets, etc. The
Borrower will not, and will not permit any of its Subsidiary Guarantors to, wind
up, liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of all or any part of
its property or assets, or enter into any sale-leaseback transactions, or
purchase or otherwise acquire (in one or a series of related transactions) any
part of the property or assets (other than purchases or other acquisitions of
inventory, materials and equipment in the ordinary course of business) of any
Person (or agree to do any of the foregoing at any future time), except that:
(i) Capital Expenditures by the Borrower and its Subsidiaries shall be
permitted;
(ii) each of the Borrower and its Subsidiaries may make sales of
inventory in the ordinary course of business;
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(iii) each of the Borrower and its Subsidiaries may sell obsolete,
uneconomic or worn-out equipment or intellectual property in the ordinary
course of business;
(iv) each of the Borrower and its Subsidiaries may sell other assets
(other than the capital stock of any Subsidiary Guarantor), so long as (v)
no Default or Event of Default then exists or would result therefrom, (w)
each such sale is in an arm's-length transaction and the Borrower or the
respective Subsidiary receives at least fair market value (as determined in
good faith by the Borrower or such Subsidiary, as the case may be), (x) the
total consideration received by the Borrower or such Subsidiary is at least
90% cash and is paid at the time of the closing of such sale, (y) the Net
Sale Proceeds therefrom are applied as (and to the extent) required by
Section 3.02(c) and (z) the aggregate amount of the proceeds received from
all assets sold pursuant to this clause (iv) shall not exceed $5,000,000 in
any fiscal year of the Borrower;
(v) Investments may be made to the extent permitted by Section 7.05;
(vi) each of the Borrower and its Subsidiaries may lease (as lessee) or
license (as licensee) real or personal property (so long as any such lease
or license does not create a Capitalized Lease Obligation of the Borrower or
any of its Subsidiary Guarantors except to the extent permitted by Section
7.04(iv));
(vii) each of the Borrower and its Subsidiaries may sell or discount,
in each case without recourse and in the ordinary course of business,
accounts receivable arising in the ordinary course of business, but only in
connection with the compromise or collection thereof and not as part of any
financing transaction;
(viii) the Disposition shall be permitted;
(ix) each of the Borrower and its Subsidiaries may grant licenses,
sublicenses, leases or subleases to other Persons not materially interfering
with the conduct of the business of the Borrower or any of its Subsidiaries,
in each case so long as no such grant otherwise affects the Lender's
security interest in the asset or property subject thereto (to the extent
that a security interest is granted thereunder in such property);
(x) any Subsidiary of the Borrower (i) may be merged or consolidated
with or into the Borrower or liquidated so long as the Borrower is the
surviving corporation of such merger or consolidation or the Borrower or a
Subsidiary Guarantor thereof receives the assets of such Subsidiary upon
such liquidation and (ii) may transfer its assets to the Borrower;
(xi) any Subsidiary of the Borrower (i) may be merged or consolidated
with or into any other Subsidiary of the Borrower or liquidated so long as
(A) in the case of any (x) such merger or consolidation involving a
Subsidiary Guarantor, a Subsidiary Guarantor is the surviving corporation of
such merger or consolidation or (y) such liquidation of a Subsidiary
Guarantor, a Subsidiary Guarantor receives the assets of such Subsidiary
upon such liquidation and (B) in the case of any (x) such merger or
xxxxxxx-
28
dation involving a Wholly-Owned Subsidiary of the Borrower, in addition to
the requirements of preceding clause (A)(x), a Wholly-Owned Subsidiary is
the surviving corporation of such merger or consolidation or (y) such
liquidation, in addition to the requirements of preceding clause (B)(y), a
Wholly-Owned Subsidiary receives the assets of such Subsidiary upon such
liquidation and (ii) may transfer its assets to any other Subsidiary of the
Borrower, provided that if the transferor Subsidiary is a Subsidiary
Guarantor, then such transfer must be to another Subsidiary Guarantor;
(xii) the Borrower may sell or otherwise transfer inventory to one or
more of the Subsidiary Guarantors for resale by such Subsidiary Guarantors
at fair market value;
(xiii) the Borrower may sell or otherwise transfer equipment, other
fixed assets and intellectual property in the ordinary course of business to
one or more of the Subsidiary Guarantors;
(xiv) the Borrower and its Subsidiaries may sell Cash Equivalents for
cash and at a purchase price no less than the principal amount thereof plus
any accrued and unpaid interest thereon; and
(xv) expenditures not to exceed $1,000,000 for repurchases of shares of
UTC Common Stock on the NASDAQ-NMS are permitted.
To the extent the Lender waives the provisions of this Section 7.02 with respect
to the sale of any Collateral, or any Collateral is sold as permitted by this
Section 7.02 (other than to the Borrower or a Subsidiary thereof), such
Collateral shall be sold free and clear of the Liens created by the Security
Documents.
7.03 Dividends. The Borrower will not, and will not permit any of its
Subsidiaries to, authorize, declare or pay any Dividends with respect to the
Borrower or any of its Subsidiaries, except that:
(i) any Subsidiary of the Borrower may pay cash Dividends to the
Borrower or to any Guarantor Subsidiary of the Borrower;
(ii) any non-Wholly-Owned Subsidiary of the Borrower may pay cash
Dividends to its shareholders generally so long as the Borrower or its
respective Subsidiary which owns the equity interest in the Subsidiary
paying such Dividends receives at least its proportionate share thereof
(based upon its relative holding of the equity interest in the Subsidiary
paying such Dividends and taking into account the relative preferences, if
any, of the various classes of equity interests of such Subsidiary); and
(iii) so long as there shall exist no Default or Event of Default (both
before and after giving effect to the payment thereof), the Borrower may
repurchase outstanding shares of its common stock (or options to purchase
such common stock) or Qualified Preferred Stock following the death,
disability or termination of employment of officers, directors or employees
of the Borrower or any of its Subsidiaries, provided that (x) the only
consideration paid by the Borrower in respect of such purchases shall be
cash,
29
Shareholder Subordinated Notes and/or cancellation of Indebtedness owing to
the Borrower from such employees and (y) the sum of (I) the aggregate amount
paid by the Borrower in cash in respect of all such purchases plus (II) the
aggregate amount of all principal, interest and other cash payments made on
all Shareholder Subordinated Notes shall not exceed $500,000.
7.04 Indebtedness. The Borrower will not, and will not permit any of
its Subsidiary Guarantors to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Existing Indebtedness outstanding on the Closing Date and listed
on Schedule VI, without giving effect to any subsequent extension, renewal
or refinancing thereof except to the extent set forth on Schedule VI,
provided that the aggregate principal amount of the Indebtedness to be
extended, renewed or refinanced does not increase from that amount
outstanding at the time of any such extension, renewal or refinancing;
(iii) Indebtedness under Interest Rate Protection Agreements entered
into with respect to other Indebtedness permitted under this Section 7.04 so
long as the entering into of such Interest Rate Protection Agreements are
bona fide hedging activities and are not for speculative purposes;
(iv) Indebtedness of the Borrower and its Subsidiaries evidenced by
Capitalized Lease Obligations and purchase money Indebtedness described in
Section 7.01(vii), provided that in no event shall the sum of the aggregate
principal amount of all Capitalized Lease Obligations and purchase money
Indebtedness permitted by this clause (iv) exceed $25,000,000 at any time
outstanding;
(v) Indebtedness consisting of vendor financing provided by the Lender
to the Borrower pursuant to, and in accordance with the terms of, the Sale
Documents;
(vi) intercompany Indebtedness among the Borrower and its Subsidiaries
to the extent permitted by Section 7.05(ix);
(vii) Indebtedness consisting of guaranties by the Borrower and its
Subsidiaries of each other's Indebtedness (other than Shareholder
Subordinated Notes) and lease and other obligations permitted under this
Agreement, provided that to the extent that any Subsidiary of the Borrower
which is not then a Subsidiary Guarantor guaranties any obligation of the
Borrower or any Subsidiary Guarantor, such Subsidiary shall become a Credit
Party hereunder by taking all actions necessary as if such Subsidiary were a
newly created or acquired Wholly-Owned Domestic Subsidiary;
(viii) Indebtedness in respect of bid, performance, customs, appeal,
surety and similar bonds entered into in the ordinary course of business in
an aggregate amount not to exceed $500,000 at any time outstanding;
30
(ix) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business so long as such
Indebtedness is extinguished within three Business Days of the incurrence
thereof;
(x) Indebtedness in respect of guarantees of royalty payments entered
into in the ordinary course;
(xi) Indebtedness under Other Hedging Agreements providing protection
against fluctuations in currency values in connection with the Borrower's or
any of its Subsidiaries' operations so long as management of the Borrower or
such Subsidiary, as the case may be, has determined that the entering into
of such Other Hedging Agreements are bona fide hedging activities and are
not for speculative purposes;
(xii) Indebtedness in respect of unpaid insurance premiums in
connection with the financing of insurance premiums;
(xiii) Indebtedness in respect of any convertible debentures offered
pursuant to a Rule 144A offering under the Securities Act of 1933, provided
that any proceeds thereof are applied in accordance with Section 3.02(a);
and
(xiv) so long as no Default or Event of Default then exists or would
result from the incurrence thereof, additional unsecured Indebtedness of the
Borrower and its Subsidiaries not otherwise permitted hereunder in an
aggregate principal amount not to exceed $1,000,000 at any time outstanding.
7.05 Advances, Investments and Loan. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, lend money or
credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents (each of the foregoing an "Investment" and,
collectively, "Investments"), except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold accounts
receivables owing to any of them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms of the Borrower or such Subsidiary;
(ii) the Borrower and its Subsidiaries may acquire and hold cash and
Cash Equivalents;
(iii) the Borrower and its Subsidiaries may hold the Investments held
by them on the Closing Date and described on Schedule IX, provided that any
additional Investments made with respect thereto shall be permitted only if
independently justified under the other provisions of this Section 7.05;
31
(iv) the Borrower and its Subsidiaries may acquire and own investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in good faith settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;
(v) the Borrower and its Subsidiaries may make loans and advances in
the ordinary course of business to their respective employees so long as the
aggregate principal amount thereof at any time outstanding (determined
without regard to any write-downs or write-offs of such loans and advances)
shall not exceed $250,000;
(vi) the Borrower may acquire and hold obligations of one or more
officers or other employees of the Borrower or any of its Subsidiaries in
connection with such officers' or employees' acquisition of shares of common
stock or Qualified Preferred Stock or options with respect to any such stock
of the Borrower so long as no cash is paid by the Borrower or any of its
Subsidiaries to such officers or employees in connection with the
acquisition of any such obligations;
(vii) the Borrower may enter into Interest Rate Protection Agreements
to the extent permitted by Section 7.04(iii) and the Borrower and its
Subsidiaries may enter into Other Hedging Agreements to the extent permitted
by Section 7.04(xi);
(viii) the Borrower and its Subsidiaries may acquire and hold
promissory notes and other non-cash consideration issued by the purchaser of
assets in connection with a sale of such assets to the extent permitted by
Section 7.02(iv);
(ix) (A) the Borrower and the Subsidiary Guarantors may make
intercompany loans and advances between or among one another (collectively,
"Intercompany Loans"), and (B) the Borrower and the Subsidiary Guarantors
may make cash equity contributions in their respective Subsidiaries which
are Subsidiary Guarantors;
(x) the Borrower and its Subsidiaries may hold additional investments
in their respective Subsidiaries to the extent that such investments reflect
an increase in the value of such Subsidiaries;
(xi) the Borrower and its Subsidiaries may make transfers of assets in
accordance with, and to the extent permitted by, Sections 7.02(x), (xi),
(xii) and (xiii);
(xii) the Borrower and the Subsidiary Guarantors may capitalize or
forgive Indebtedness owed to one another;
(xiii) the Borrower and its Subsidiaries may make advances in respect
of license royalty payments, payments to suppliers in respect of purchases
of inventory and other advance payments as part of the Borrower's or such
Subsidiary's operations (other than to any director, officer or employee
thereof), in each case in the ordinary course of business and on a basis
consistent with past practices;
32
(xiv) so long as no Default or Event of Default then exists or would
result therefrom, the Borrower and its Subsidiaries may make Investments not
otherwise permitted by clauses (i) through (xiii) of this Section 7.05 in an
aggregate amount not to exceed $250,000 (determined without regard to any
write-downs or write-offs thereof), net of cash payments of principal in the
case of loans and cash equity returns (whether as a dividend or redemption)
in the case of equity investments); and
(xv) the Borrower may consummate the Sale.
7.06 Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would reasonably be obtained by
the Borrower or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that the following in
any event shall be permitted:
(i) Dividends may be paid to the extent provided in Section 7.03;
(ii) loans may be made and other transactions may be entered into by
the Borrower and its Subsidiaries to the extent permitted by Sections 7.02,
7.04 and 7.05;
(iii) customary fees may be paid to non-officer directors of the
Borrower and its Subsidiaries and expenses and indemnifications for all
directors of the Borrower;
(iv) the transactions set forth on Schedule XI pursuant to the
arrangements with respect thereto as in effect on the Closing Date;
(v) the Borrower may issue and sell shares of its capital stock to the
extent not otherwise prohibited under this Agreement; and
(vi) the Borrower and its Subsidiaries may enter into, and may make
payments under, employment agreements, employee benefits plans, stock option
plans, indemnification provisions and other similar compensatory
arrangements with officers, employees and directors of the Borrower and its
Subsidiaries in the ordinary course of business.
7.07 Limitation on Voluntary Payments and Modifications of Certain
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
Other Agreements, etc. The Borrower will not, and will not permit any of its
Subsidiary Guarantors to:
(i) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of, or any
prepayment or redemption as a result of any asset sale, change of control or
similar event of (including in each case, without limitation, by way of
depositing with the trustee with respect thereto or any other Person money
or securities before due for the purpose of paying when due), any Permitted
Indebtedness;
33
(ii) make (or give any notice in respect of), any payment, prepayment,
redemption or acquisition for value of (including, without limitation, by
way of depositing with any Person money or securities before due for the
purpose of paying when due) any Shareholder Subordinated Notes (whether in
respect of principal, interest or otherwise), provided that so long as no
Default or Event of Default then exists or would result therefrom, the
Borrower may make payments on Shareholder Subordinated Notes to the extent
permitted by Section 7.03(iii);
(iii) amend or modify, or permit the amendment or modification of, any
provision of any Shareholder Subordinated Note (including as a result of a
refinancing or replacement thereof);
(iv) amend, modify or change its certificate or articles of
incorporation (including, without limitation, by the filing or modification
of any certificate or articles of designation) or by-laws (or the equivalent
organizational documents) or any agreement entered into by it with respect
to its capital stock (including any Shareholders' Agreement), or enter into
any new agreement with respect to its capital stock, unless such amendment,
modification, change or other action contemplated by this clause (vii) could
not reasonably be expected to be adverse to the interests of the Lender in
any material respect; or
(v) amend, modify or change any provision of (x) any Management
Agreement, unless such amendment, modification or change could not
reasonably be expected to be adverse to the interests of the Lender
(although no amendment or change may be made to any monetary term thereof)
or (y) any Tax Sharing Agreement or enter into any new tax sharing
agreement, tax allocation agreement or similar agreement without the prior
written consent of the Lender.
7.08 Limitation on Certain Restrictions on Subsidiaries. Subject to
Section 7.12, the Borrower will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any such
Subsidiary to (a) pay dividends or make any other distributions on its capital
stock or any other interest or participation in its profits owned by the
Borrower or any Subsidiary of the Borrower, or pay any Indebtedness owed to the
Borrower or any Subsidiary of the Borrower, (b) make loans or advances to the
Borrower or any Subsidiary of the Borrower or (c) transfer any of its properties
or assets to the Borrower or any Subsidiary of the Borrower, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) this Agreement and the other Credit Documents, (iii) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of the Borrower or any Subsidiary of the Borrower, (iv) customary provisions
restricting assignment of any licensing agreement (in which the Borrower or such
Subsidiary is the licensee) or other contract entered into by the Borrower or
any Subsidiary of the Borrower in the ordinary course of business, (v)
restrictions on the transfer of any asset pending the close of the sale of such
asset, (vi) restrictions on the transfer of any asset subject to a Lien
permitted by Section 7.01 and (vii) customary restrictions set forth in any
joint venture agreement permitted hereunder on the transfer of any asset of the
joint venture subject thereto.
34
7.09 Limitation on Issuance of Capital Stock. (a) The Borrower will
not, and will not permit any of its Subsidiaries to, issue (i) any common stock
other than common stock issued pursuant to the Sale Documents and in accordance
with Section 1.05(b) hereof, (ii) any preferred stock other than Qualified
Preferred Stock of the Borrower or (iii) any redeemable common stock other than
common stock that is redeemable at the sole option of the Borrower or such
Subsidiary, as the case may be.
(b) The Borrower will not permit any of its Subsidiaries to issue any
capital stock (including by way of sales of treasury stock) or any options or
warrants to purchase, or securities convertible into, capital stock, except (i)
for transfers and replacements of then outstanding shares of capital stock, (ii)
for stock splits, stock dividends and issuances which do not decrease the
percentage ownership of the Borrower or any of its Subsidiaries in any class of
the capital stock of such Subsidiary, (iii) to qualify directors to the extent
required by applicable law, (iv) for issuances by newly created or acquired
Subsidiaries in accordance with the terms of this Agreement or (v) to the
Borrower or a Subsidiary Guarantor that is a Wholly-Owned Subsidiary of the
Borrower.
7.10 Business. The Borrower will not, and will not permit any of its
Subsidiaries to, engage in any business other than the businesses engaged in by
the Borrower and its Subsidiaries as of the Closing Date and reasonable
extensions thereof and activities incidental thereof.
7.11 Limitation on Creation of Subsidiaries. The Borrower will not, and
will not permit any of its Subsidiary Guarantors to, establish, create or
acquire after the Closing Date any Subsidiary, provided that the Borrower and
its Wholly-Owned Subsidiaries that are Subsidiary Guarantors shall be permitted
to (A) establish, create and, to the extent permitted by Section 7.05(xiv),
acquire Wholly-Owned Subsidiaries so long as (i) each such new Wholly-Owned
Domestic Subsidiary executes a counterpart of the Subsidiaries Guaranty and the
Security Agreement, and (ii) each such new Wholly-Owned Domestic Subsidiary, to
the extent requested by the Lender, takes all actions required pursuant to
Section 6.10 and (B) establish, create and acquire non-Wholly-Owned Subsidiaries
in each case to the extent permitted by Section 7.05(xiv). In addition, each
such new Wholly-Owned Subsidiary shall execute and deliver, or cause to be
executed and delivered, all other relevant documentation of the type described
in Section 4 as such new Wholly-Owned Subsidiary would have had to deliver if
such new Wholly-Owned Subsidiary were a Credit Party on the Closing Date.
7.12 Bank Accounts; Transfers. The Borrower shall not permit Uniroyal
Optoelectronics, LLC ("UOE") to create, maintain or have access to any bank
account, deposit account or other similar account other than the Bank Account.
The Borrower shall ensure that all cash received by UOE shall be deposited in
the Bank Account. Unless an Event of Default has occurred and is continuing
(whereupon, upon such Event of Default, no funds may be withdrawn by UOE or
other Person, subject to applicable laws, from the Bank Account without the
prior written consent or instructions of the Lender), funds may be withdrawn
from the Bank Account by UOE exclusively for the purpose of making payments to
current account debtors in the ordinary course of business and for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of UOE's salaried employees and otherwise in accordance with the
35
terms of the Credit Documents. Without limiting the foregoing, UOE shall not be
permitted to make any transfers out of the Bank Account to the Borrower or any
other Subsidiary of the Borrower.
SECTION 8. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
8.01 Payments. The Borrower shall (i) default in the payment when due
of any principal or interest of the Loan or any Note or (ii) default, and such
default shall continue unremedied for three or more Business Days, in the
payment when due of any other amounts owing hereunder or thereunder; or
8.02 Representations, etc. Any representation, warranty or statement
made or deemed made by any Credit Party herein or in any other Credit Document
or in any certificate delivered to the Lender pursuant hereto or thereto shall
prove to be untrue in any material respect on the date as of which made or
deemed made; or
8.03 Covenants. The Borrower or any of its Subsidiary Guarantors shall
(i) default in the due performance or observance by it of any term, covenant or
agreement contained in Section 6.01(g)(i), 6.09, 6.12 or Section 7 or (ii)
default in the due performance or observance by it of any other term, covenant
or agreement contained in this Agreement or any other Credit Document (other
than those set forth in Sections 8.01 and 8.02) and such default shall continue
unremedied for a period of 30 days after written notice thereof to the
defaulting party by the Lender; or
8.04 Default Under Other Agreements. (i) The Borrower or any of its
Subsidiary Guarantors shall (x) default in any payment of any Indebtedness
(other than the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (y) default
in the observance or performance of any agreement or condition relating to any
Indebtedness (other than the Obligations) or contained in any instrument or
agreement evidencing, securing, guaranteeing, or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause (determined without regard to whether any notice is required), any such
Indebtedness to become due prior to its stated maturity or (z) default in the
observance or performance of any term or condition under the Sale Documents or
the Disposition Documents, or (ii) any Indebtedness (other than the Obligations)
of the Borrower or any of its Subsidiaries shall be declared to be (or shall
become) due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof, provided
that it shall not be a Default or an Event of Default under this Section 8.04
unless the aggregate principal amount of all Indebtedness as described in
preceding clauses (i) and (ii) is at least $500,000; or
8.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary
36
case is commenced against the Borrower or any of its Subsidiaries, and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Borrower or any of its Subsidiaries, or the Borrower or any of
its Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Borrower or any of its Subsidiaries, or there is
commenced against the Borrower or any of its Subsidiaries any such proceeding
which remains undismissed for a period of 60 days, or the Borrower or any of its
Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or the Borrower or
any of its Subsidiaries suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue undischarged or unstayed
for a period of 60 days; or the Borrower or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or the Borrower or any of its
Subsidiaries shall be generally not paying its debts as such debts become due or
shall admit in writing its inability to pay its debts generally; or any
corporate action is taken by the Borrower or any of its Subsidiaries for the
purpose of effecting any of the foregoing; or
8.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days, any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan which is subject to Title IV of
ERISA is, shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made with respect to a Plan or a
Foreign Pension Plan has not been timely made, the Borrower or any Subsidiary of
the Borrower or any ERISA Affiliate has incurred or is likely to incur any
liability to or on account of a Plan under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971
or 4975 of the Code or on account of a group health plan (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the
Code, or the Borrower or any Subsidiary of the Borrower has incurred or is
likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) that provide benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or Plans or Foreign Pension Plans, a "default" within the meaning of
Section 4219(c)(5) of ERISA shall occur with respect to any Plan, any applicable
law, rule or regulation is adopted, changed or interpreted, or the
interpretation or administration thereof is changed, in each case after the date
hereof, by any governmental authority or agency or by any court (a "Change of
Law"), or, as a result of a Change in Law, an event occurs following a Change in
Law, with respect to or otherwise affecting any Plan; (b) there shall result
from any
37
such event or events the imposition of a lien, the granting of a security
interest, or a liability or a material risk of incurring a liability; and (c)
such lien, security interest or liability, individually and/or in the aggregate,
has had, or could reasonably be expected to have, a Material Adverse Effect; or
8.07 Security Documents. Any of the Security Documents shall cease to
be in full force and effect (other than in accordance with the terms thereof),
or shall cease to give the Lender the Liens, rights, powers and privileges
purported to be created thereby or any Credit Party shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any such Security Document and such default
shall continue beyond the period of grace, if any, specifically applicable
thereto pursuant to the terms of such Security Document; or
8.08 Subsidiaries Guaranty. The Subsidiaries Guaranty or any provision
thereof shall cease to be in full force or effect (other than in accordance with
the express terms thereof) as to any Subsidiary Guarantor, or any Subsidiary
Guarantor or any Person acting by or on behalf of such Subsidiary Guarantor
shall deny or disaffirm such Subsidiary Guarantor's obligations under the
Subsidiaries Guaranty or any Subsidiary Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Subsidiaries Guaranty; or
8.09 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any Subsidiary of the Borrower involving in the
aggregate for the Borrower and its Subsidiaries a liability (not paid or fully
covered by a reputable and solvent insurance company) and such judgments and
decrees either shall be final and non-appealable and remains unpaid for 7 days
after the entry thereof or shall not be vacated, discharged or stayed or bonded
pending appeal within 60 days of entry thereof, and the aggregate amount of all
such judgments equals or exceeds $500,000; or
8.10 Change of Control. A Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Lender may by written notice to the Borrower, take
any or all of the following actions, without prejudice to the rights of the
Lender (provided that, if an Event of Default specified in Section 8.05 shall
occur with respect to the Borrower, the result which would occur upon the giving
of written notice by the Lender as specified in clauses (i) and (ii) below shall
occur automatically without the giving of any such notice): (i) declare the
Commitment terminated, whereupon the Commitment of the Lender shall forthwith
terminate immediately; (ii) declare the principal of and any accrued interest in
respect of the Loan and the Note and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; and (iii) enforce any or all of the
Liens and security interests created pursuant to the Security Documents in
accordance with the terms thereof.
38
SECTION 9. Definitions and Accounting Terms.
9.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Additional Interest Trigger Date" shall mean the earlier of September
20, 2001 and the consummation of the Disposition.
"Additional Security Documents" shall have the meaning provided in
Section 6.10.
"Adhesives Division" shall mean the adhesives and sealants business of
Uniroyal Engineered Products L.L.C., a Delaware limited liability company.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control another Person if
such Person possesses, directly or indirectly, the power (i) to vote 5% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that the Lender (nor
any Affiliate thereof) shall not be considered an Affiliate of the Borrower or
any Subsidiary thereof.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
hereof), extended or renewed from time to time.
"Asset Sale" shall mean any sale, transfer or other disposition by the
Borrower or any of its Subsidiaries to any Person (including by way of
redemption by such Person) other than to the Borrower or a Wholly-Owned
Subsidiary of the Borrower of any asset (including, without limitation, any
capital stock or other securities of, or equity interests in, another Person)
other than sales of assets pursuant to Sections 7.02(ii), (iii), (vii), (ix),
(x), (xi), (xii), (xiii) and (xiv).
"Bank Account" shall mean that certain deposit account known as Acct#
DDA#2090002593219 maintained with First Union National Bank.
"Bankruptcy Code" shall have the meaning provided in Section 8.05.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the borrowing of the Loan from the Lender on the
Closing Date.
39
"Business Day" shall mean for all purposes any day except Saturday,
Sunday and any day which shall be in New York, New York a legal holiday or a day
on which banking institutions are authorized or required by law or other
government action to close.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles and, without duplication, the amount of
Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" shall mean, with respect to any Person,
all rental obligations of such Person which, under generally accepted accounting
principles, are or will be required to be capitalized on the books of such
Person, in each case taken at the amount thereof accounted for as indebtedness
in accordance with such principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
twelve months from the date of acquisition, (ii) marketable direct obligations
issued by any state of the United States or any political subdivision of any
such state or any public instrumentality thereof maturing within twelve months
from the date of acquisition thereof and, at the time of acquisition, having one
of the two highest ratings obtainable from either Standard & Poor's Ratings
Services or Xxxxx'x Investors Service, Inc., (iii) Dollar denominated time
deposits, bankers acceptance and certificates of deposit of any commercial bank
having, or which is the principal banking subsidiary of a bank holding company
having, a long-term unsecured debt rating of at least "A" or the equivalent
thereof from Standard & Poor's Ratings Services or "A2" or the equivalent
thereof from Xxxxx'x Investors Service, Inc. with maturities of not more than
twelve months from the date of acquisition by such Person, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iii) above, (v) commercial paper issued by
any Person incorporated in the United States rated at least A-1 or the
equivalent thereof by Standard & Poor's Ratings Services or at least P-1 or the
equivalent thereof by Xxxxx'x Investors Service, Inc. and in each case maturing
not more than twelve months after the date of acquisition by such Person and
(vi) investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (v) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. ss. 9601 et seq.
"Change of Control" shall mean (i) Xxxxxx X. Xxxx shall at any time and
for any reason fail to own at least 80% of the economic and voting interests in
the Borrower' capital stock which he owned as of the Closing Date, (ii) a
"change of control" or similar event shall occur as provided in any
documentation evidencing or governing the Borrower's or any of its Subsidiaries'
Indebtedness, and (iii) a change of control of the Borrower that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A, as in effect on the
40
date hereof, promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), shall occur; provided that, without limitation, such a
Change of Control shall be deemed to occur if: (A) any "Person" (as such term is
used in ss.13(d) and ss.14(d) of the Exchange Act), except for any employee
benefit plan of the Borrower or any Subsidiary or related corporation, or any
entity holding voting securities of the Borrower for or pursuant to the terms of
any such plan, shall become the beneficial owner, directly or indirectly, of
securities of the Borrower representing 25% or more of the combined voting power
of the Borrower's then outstanding securities; (B) there shall occur a contested
proxy solicitation of the Borrower's shareholders that results in the contesting
party obtaining the ability to vote securities representing 25% or more of the
combined voting power of the Borrower's then-outstanding securities; or (C)
there shall occur: (1) a sale, exchange, transfer or other disposition of
substantially all of the assets of the Borrower to another entity, except to an
entity controlled directly or indirectly by the Borrower or by the same Persons
that controlled the Borrower immediately prior to such sale, exchange, transfer
or other disposition, (2) a merger or consolidation in which the Borrower is a
constituent unless the surviving entity is controlled directly or indirectly by
the same Persons that controlled the Borrower immediately prior to such merger
or consolidation or (3) the adoption of a plan of liquidation or dissolution of
the Borrower other than pursuant to bankruptcy or insolvency laws. For purposes
of this definition "control", when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have the meanings
correlative to the foregoing.
"Change of Law" shall have the meaning provided in Section 8.06.
"Closing Date" shall have the meaning provided in Section 11.09.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purported to be
granted) pursuant to any Security Document, including, without limitation, all
Security Agreement Collateral.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 4.05.
"Commitment" shall mean the amount set forth opposite the Lender's name
in Schedule I directly below the column entitled "Commitment," as same shall be
terminated pursuant to Sections 2.01 and/or 8.
"Contingent Obligation" shall mean, as to any Person, any obligation of
such Person as a result of such Person being a general partner of the other
Person, unless the underlying obligation is expressly made non-recourse as to
such general partner, and any
41
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Control Agreement" shall have the meaning provided in Section 6.10(d).
"Conversion" shall have the meaning provided in Section 10.01(a).
"Conversion Notice" shall have the meaning provided in Section
10.01(b).
"Conversion Price" shall have the meaning provided in Section 10.01(a).
"Conversion Shares" shall have the meaning provided in Section 5.14(b).
"Credit Documents" shall mean this Agreement and, after the execution
and delivery thereof pursuant to the terms of this Agreement, the Note, the
Subsidiaries Guaranty and each Security Document.
"Credit Party" shall mean the Borrower and each Subsidiary Guarantor.
"Current Market Price" shall mean, in respect of any share of UTC
Common Stock on any date herein specified, the average of the daily market
prices for 30 consecutive Business Days commencing 45 days before such date. The
daily market price for each such Business Day shall be (i) the last sale price
on such day on the principal stock exchange or NASDAQ National Market System
("NASDAQ-NMS") on which such UTC Common Stock is then listed or admitted to
trading, (ii) if no sale takes place on such day on any such exchange or
NASDAQ-NMS, the average of the last reported closing bid and asked prices on
such day as officially quoted on any such exchange or NASDAQ-NMS, (iii) if the
UTC Common Stock is not then listed or admitted to trading on any stock exchange
or NASDAQ-NMS, the average of the last reported closing bid and asked prices on
such day in the over-the-counter market, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., (iv) if neither such corporation at the time is engaged
in the business of
42
reporting such prices, as furnished by any similar firm then engaged in such
business, or (v) if there is no such firm, as furnished by any member of the
National Association of Securities Dealers ("NASD") selected mutually by the
Lender and Company or, if they cannot agree upon such selection, as selected by
two such members of the NASD, one of which shall be selected by the Lender and
one of which shall be selected by the Borrower.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Disposition" shall mean the sale, transfer, or other disposition of
the Adhesives Division of the Borrower for cash in an amount at least equal to
the amount of the Loan.
"Disposition Documents" shall mean the documents which effect, or
otherwise evidence, the Disposition, which shall, in all events, be reasonably
satisfactory to the Lender.
"Dividend" shall mean, with respect to any Person, that such Person has
declared or paid a dividend or returned any equity capital to its stockholders,
partners or members or authorized or made any other distribution, payment or
delivery of property (other than common stock of such Person) or cash to its
stockholders, partners or members as such, or redeemed, retired, purchased or
otherwise acquired, directly or indirectly, for a consideration any shares of
any class of its capital stock or any partnership or membership interests
outstanding on or after the Closing Date (or any options or warrants issued by
such Person with respect to its capital stock or other equity interests), or set
aside any funds for any of the foregoing purposes, or shall have permitted any
of its Subsidiaries to purchase or otherwise acquire for a consideration any
shares of any class of the capital stock or any partnership or membership
interests of such Person outstanding on or after the Closing Date (or any
options or warrants issued by such Person with respect to its capital stock or
other equity interests). Without limiting the foregoing, "Dividends" with
respect to any Person shall also include all payments made or required to be
made by such Person with respect to any stock appreciation rights, plans, equity
incentive or achievement plans or any similar plans or setting aside of any
funds for the foregoing purposes.
"Documents" shall mean the Credit Documents and the Sale Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower that
is incorporated under the laws of the United States, any State thereof or the
District of Columbia.
"Employment Agreements" shall have the meaning provided in Section
4.05.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any
43
applicable Environmental Law, and (b) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief in connection with alleged injury or threat of injury to
health, safety or the environment due to the presence of Hazardous Materials.
"Environmental Law" shall mean any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy and
rule of common law now or hereafter in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
employee health and safety or Hazardous Materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 X.X.X.xx.
1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the
Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. ss. 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et
seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42
U.S.C. ss. 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C.
ss. 1801 et seq.; the Occupational Safety and Health Act, 29 U.S.C. ss. 651 et
seq.; and any state and local or foreign counterparts or equivalents, in each
case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" (i) within the meaning of Section 414(b), (c),
(m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of
the Borrower being or having been a general partner of such person.
"Event of Default" shall have the meaning provided in Section 8.
"Existing Indebtedness" shall have the meaning provided in Section
5.22.
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 4.05.
"Final Maturity Date" shall mean the earlier to occur of the
consummation of the Disposition and the second year anniversary of the Closing
Date.
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States by the Borrower or any one or more of its
Subsidiaries primarily for the benefit of employees of the Borrower or such
Subsidiaries residing outside the United States, which plan, fund or other
similar program provides, or results in, retirement income, a deferral of income
in
44
contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower which
is not a Domestic Subsidiary.
"Fund Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control
another Person if such first Person possesses, directly or indirectly, the power
(i) to vote 50% or more of the securities having ordinary voting power for the
election of directors of such Person or (ii) to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contains
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, the Release of which is prohibited, limited or
regulated by any governmental authority.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the maximum amount available to be drawn under all letters of
credit, bankers' acceptances and similar obligations issued for the account of
such Person and all unpaid drawings in respect of such letters of credit,
bankers' acceptances and similar obligations, (iii) all Indebtedness of the
types described in clause (i), (ii), (iv), (v), (vi) or (vii) of this definition
secured by any Lien on any property owned by such Person, whether or not such
Indebtedness has been assumed by such Person (provided that, if the Person has
not assumed or otherwise become liable in respect of such Indebtedness, such
Indebtedness shall be deemed to be in an amount equal to the fair market value
of the property to which such Lien relates as determined in good faith by such
Person), (iv) the aggregate amount required to be capitalized under leases under
which such Person is the lessee, (v) all obligations of such Person to pay a
specified purchase price for goods or services, whether or not delivered or
accepted, i.e., take-or-pay and similar obligations, (vi) all Contingent
Obligations of such Person, and (vii) all obligations under any Interest Rate
Protection Agreement, any Other Hedging Agreement or under any similar type of
agreement. Notwithstanding the foregoing, Indebtedness shall not include trade
payables and accrued expenses incurred by any Person in accordance with
customary practices and in the ordinary course of business of such Person.
"Intercompany Loan" shall have the meaning provided in Section
7.05(ix).
45
"Intercompany Note" shall mean a promissory note, in the form of
Exhibit H, evidencing Intercompany Loans.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement or other similar agreement or arrangement.
"Investments" shall have the meaning provided in Section 7.05.
"Joint Venture Company" shall mean Uniroyal Optoelectronics, LLC, a
Delaware limited liability company.
"Leaseholds" of any Person shall mean all the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Lender" shall have the meaning provided in the first paragraph to this
Agreement.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall have the meaning provided in Section 1.01.
"Management Agreements" shall have the meaning provided in Section
4.05.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean (i) a material adverse effect on
the business, operations, properties, assets, liabilities, condition (financial
or otherwise) or prospects of the Borrower or of the Borrower and its
Subsidiaries taken as a whole or (ii) a material adverse effect (x) on the
rights or remedies of the Lender hereunder or under any other Credit Document or
(y) on the ability of any Credit Party to perform its obligations to the Lender
hereunder or under any other Credit Document.
"Minimum Borrowing Amount" shall mean $100,000.
"Monthly Payment Date" shall mean the last Business Day of each
calendar month occurring after September 1, 2001.
"NAIC" shall mean the National Association of Insurance Commissioners.
"NASDAQ-NMS" shall have the meaning provided for in the definition of
"Current Market Price" as set forth in this Article IX.
46
"Net Debt Proceeds" shall mean, with respect to any incurrence of
Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith)
received by the respective Person from the respective incurrence of such
Indebtedness for borrowed money.
"Net Equity Proceeds" shall mean, with respect to each issuance or sale
of any equity by any Person or any capital contribution to such Person, the cash
proceeds (net of underwriting discounts and commissions and other reasonable
costs associated therewith) received by such Person from the respective sale or
issuance of its equity or from the respective capital contribution.
"Net Insurance Proceeds" shall mean, with respect to any Recovery
Event, the cash proceeds (net of reasonable costs and taxes incurred in
connection with such Recovery Event) received by the respective Person in
connection with such Recovery Event.
"Net Sale Proceeds" shall mean, for any Asset Sale, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from such sale of assets, net of the reasonable costs of such sale
(including fees and commissions, payments of unassumed liabilities relating to
the assets sold and required payments of any Indebtedness (other than
Indebtedness secured pursuant to the Security Documents) which is secured by the
respective assets which were sold), and the incremental taxes paid or payable as
a result of such Asset Sale.
"Non-Compete Agreements" shall have the meaning provided in Section
4.05.
"Note" shall have the meaning provided in Section 1.05(a).
"Notice of Borrowing" shall have the meaning provided in Section 1.02.
"Notice Office" shall mean the office of the Lender located at 000
Xxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, Attention: Chief Financial Officer or
such other office or person as the Lender may hereafter designate in writing as
such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Lender pursuant to
the terms of this Agreement or any other Credit Document.
"Organic Change" shall have the meaning provided in Section 10.01(g).
"Other Hedging Agreement" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Liens" shall have the meaning provided in Section 7.01.
47
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of ERISA,
which is maintained or contributed to by (or to which there is an obligation to
contribute of) the Borrower or a Subsidiary of the Borrower or an ERISA
Affiliate, and each such plan for the five year period immediately following the
latest date on which the Borrower, a Subsidiary of the Borrower or an ERISA
Affiliate maintained, contributed to or had an obligation to contribute to such
plan.
"Pricing Date" shall have the meaning provided in Section 10.1(a).
"Prime Rate" shall mean the rate which Bankers Trust Company announces
from time to time as its prime lending rate, the Prime Rate to change when and
as such prime lending rate changes.
"Projections" shall mean the projections, delivered to the Lender on or
about the Closing Date, which were prepared by or on behalf of the Borrower in
connection with the Transaction and delivered to the Lender prior to the Closing
Date.
"Qualified Preferred Stock" shall mean any preferred stock of the
Borrower so long as the terms of any such preferred stock (w) do not contain any
mandatory put, redemption, repayment, sinking fund or other similar provision
prior to December 31, 2011, (x) do not require the cash payment of dividends,
(y) do not contain any covenants (other than reporting covenants), and (z) are
otherwise reasonably satisfactory to the Lender.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. ss. 6901 et seq.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation awards payable (i)
by reason of theft, loss, physical destruction, damage, taking or any other
similar event with respect to any property or assets of the Borrower or any of
its Subsidiaries and (ii) under any policy of insurance required to be
maintained under Section 6.03.
"Register" shall have the meaning provided in Section 11.15.
"Registration Rights Agreement" shall mean that certain Registration
Rights Agreement dated as of August 2, 2001, by and between the Lender and the
Borrower.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
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"Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Release" shall mean the disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring or
migrating, into or upon any land or water or air, or otherwise entering into the
environment.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
"Sale" shall mean the sale of the Lender's limited liability membership
interest in the Joint Venture Company to the Borrower (or a Subsidiary
Guarantor) pursuant to, and in accordance with the terms of, the Sale Documents
on or before the Closing Date.
"Sale Documents" shall mean the (i) MEMBERSHIP INTEREST PURCHASE
AGREEMENT dated as of August 2, 2001 by and among the Borrower, Uniroyal
Compound Semiconductor Inc., a Delaware corporation, UOE and the Lender, (ii)
Registration Rights Agreement, (iii) Amendment to the Amended and Restated Joint
Venture Agreement dated November 30, 1998, by and among the Lender, the Borrower
and UOE, dated as of August 2, 2001, (iv) New Technology License Agreement dated
as of August 2, 2001, by and between the Lender and the Borrower and (v) all
ancillary or incidental related documents or agreements referred to in each of
the foregoing.
"SEC" shall have the meaning provided in Section 6.01(h).
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section 4.09.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Document" shall mean and include each of the Security
Agreement, the Control Agreement and, after the execution and delivery thereof,
each Additional Security Document.
"Shareholder Subordinated Note" shall mean an unsecured junior
subordinated note issued by the Borrower (and not guaranteed or supported in any
way by any Subsidiary of
49
the Borrower) in the form of Exhibit I (appropriately completed), as amended,
modified or supplemented from time to time in accordance with the terms thereof
and hereof.
"Shareholders' Agreements" shall have the meaning provided in Section
4.05.
"Specified Default" shall mean (i) a Default under Section 6.01(a), (b)
or (c), 8.01 or 8.05 and (ii) any Event of Default.
"Subsidiaries Guaranty" shall have the meaning provided in Section
4.10.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person and/or
one or more Subsidiaries of such Person has more than a 50% equity interest at
the time.
"Subsidiary Guarantor" shall mean each of (i) Uniroyal Compound
Semiconductors, Inc., a Delaware corporation, (ii) Uniroyal Optoelectronics,
LLC, a Delaware corporation, (iii) Sterling Semiconductor, Inc., a Delaware
corporation, (iv) NorLux Corp., a Delaware corporation, and (v) Uniroyal
Optoelectronics Service Company, Inc., a Delaware corporation.
"Tax Benefit" shall have the meaning provided in Section 3.04(c).
"Tax Sharing Agreements" shall have the meaning provided in Section
4.05.
"Taxes" shall have the meaning provided in Section 3.04(a).
"Transaction" shall mean, collectively, (i) the Sale, (ii) the entering
into of the Credit Documents and the borrowing of the Loan on the Closing Date
by the Borrower and (iii) the payment of all fees and expenses in connection
with the foregoing.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan determined on a plan termination basis in accordance with actuarial
assumptions at such time consistent with those prescribed by the PBGC for
purposes of Section 4044 of ERISA, exceeds the fair market value of all plan
assets allocable to such liabilities under Title IV of ERISA (excluding any
accrued but unpaid contribution).
"United States" and "U.S." shall each mean the United States of
America.
50
"UOE" shall have the meaning provided in Section 7.12.
"UTC Common Stock" shall mean shares of the common stock of the
Borrower.
"Wholly-Owned Domestic Subsidiary" shall mean each Domestic Subsidiary
of the Borrower that is also a Wholly-Owned Subsidiary of the Borrower.
"Wholly-Owned Foreign Subsidiary" shall mean each Foreign Subsidiary of
the Borrower that is also a Wholly-Owned Subsidiary of the Borrower.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, limited liability company,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.
SECTION 10. Conversion.
10.01 Conversion of Note.
(a) Subject to the provisions for adjustment hereinafter set forth, the
Note shall be convertible, in whole or in part, at any time after the Additional
Interest Trigger Date, at the option of the Lender (a "Conversion"), up to the
outstanding principal amount of the Note plus accrued but unpaid interest
thereon held by Lender at the time of such conversion into that number of fully
paid and nonassessable shares of UTC Common Stock equal to (x) the quotient
obtained by dividing (A) the principal amount of the Note plus accrued but
unpaid interest thereon to be converted by (B) the Conversion Price (as
hereinafter defined) minus (y) any additional interest paid on overdue principal
that has been paid or is owing in UTC Common Stock; subject to the proviso
contained in this Section 10.01(a). The conversion price (the "Conversion
Price") shall be the average closing price of UTC Common Stock as reported on
NASDAQ-NSM (or, if NASDAQ-NSM is not available, a similar generally accepted
reporting service in the United States of America or, if such service is not
available, a price determined in good faith by the Board of Directors of the
Borrower) for a period of fourteen (14) Business Days consisting of (x) the
seven (7) Business Days prior to the notice of conversion, (y) the Business Day
of the issuance of the Conversion Notice by the Lender and (z) the six (6)
Business Days following the issuance of the Conversion Notice (but in no event
shall the Conversion Price be higher than $8.39 or lower than $6.87, provided,
however, that the foregoing amounts shall be appropriately adjusted to give
effect to adjustments to the Conversion Price, from time to time, pursuant to
Section 10.01(f)) and shall be subject to further adjustments from time to time
pursuant to Section 10.01. The transfer and delivery of the UTC Common shares to
the Lender shall take place three (3) Business Days following the last day used
to calculate the Conversion Price (such earlier date, the "Pricing Date" and
such later date, the "Conversion Date"); provided, however, that (x) no
fractional shares shall be issued upon the conversion of the Note, (y) all
shares of UTC Common Stock (including fractions thereof) issuable upon
conversion of the Note by the Lender shall be aggregated for purposes of
determining whether conversion would result in the issuance of any fractional
share and (z) if, after the aforementioned aggregation, the
51
conversion would result in the issuance of a fraction of a share of UTC Common
Stock, Borrower shall, in lieu of issuing any fractional share, pay Lender a sum
in cash equal to the Conversion Price of such fraction on the date of
conversion.
(b) A Conversion may be effected by the Lender upon the surrender to
Borrower at the principal office of the Borrower of the Note accompanied by a
written notice stating that the Lender elects to convert all or a specified
amount of its Note in accordance with the provisions of this Section 10 and
specifying the name or names in which Lender wishes the certificate or
certificates for shares of UTC Common Stock to be issued (the "Conversion
Notice").
(c) In case the Conversion Notice shall specify a name or names other
than that of the Lender, such Conversion Notice shall be accompanied by payment
of all transfer taxes payable upon the issuance of shares of UTC Common Stock in
such name or names. Other than such taxes, Borrower will pay any and all taxes
(other than taxes based on income) that may be payable in respect of any
issuance or delivery of shares of UTC Common Stock upon a Conversion. On the
Conversion Date and upon, if applicable, payment of all transfer taxes (or the
demonstration to the reasonable satisfaction of Borrower that such taxes have
been paid), Borrower shall deliver or cause to be delivered (1) certificate(s)
representing the number of validly issued, fully paid and nonassessable full
shares of UTC Common Stock to which the holder of the Note being converted shall
be entitled and (2) if less than all of principal amount of the Note evidenced
by the surrendered Note is being converted, in exchange for the Note
surrendered, a new Note, of like tenor, in a principal amount equal the full
principal amount of the Note surrendered less the principal amount being
converted.
(d) A Conversion shall be deemed to have been made at the close of
business on the Pricing Date and of such surrender of the certificate or
certificates representing the Note to be converted so that the rights of the
holder thereof as to the Note being converted shall cease except for the right
to receive shares of UTC Common Stock in accordance herewith, and the Person
entitled to receive the shares of UTC Common Stock shall be treated for all
purposes as having become the record holder of such shares of UTC Common Stock
at such time.
(e) Borrower shall at all times reserve, and keep available for
issuance upon a Conversion, such number of its authorized but unissued shares of
UTC Common Stock as will from time to time be sufficient to permit a Conversion
of all of the outstanding principal balance of the Note, and shall take all
action required to increase the authorized number of shares of UTC Common Stock
if necessary to permit the Conversion of all of the outstanding principal
balance of the Note.
(f) The Conversion Price will be subject to adjustment from time to
time as follows:
(i) In case Borrower shall at any time or from time to time after the
Closing Date (A) pay a dividend, or make a distribution, on the outstanding
shares of UTC Common Stock in shares of UTC Common Stock, (B) subdivide the
outstanding shares of UTC Common Stock, (C) combine the outstanding shares
of UTC Common Stock into a smaller number of shares or (D) issue by
reclassification of the shares of UTC
52
Common Stock any shares of capital stock of Borrower, then, and in each such
case, the Conversion Price in effect immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the
holder of the Note thereafter surrendered for Conversion shall be entitled
to receive the number of shares of UTC Common Stock or other securities of
Borrower which Lender would have owned or have been entitled to receive
after the happening of any of the events described above, had such Note been
surrendered for conversion immediately prior to the happening of such event
or the record date therefor, whichever is earlier. An adjustment made
pursuant to this Section 10.01(f)(i) shall become effective (x) in the case
of any such dividend or distribution, immediately after the close of
business on the record date for the determination of holders of shares of
UTC Common Stock entitled to receive such dividend or distribution, or (y)
in the case of such subdivision, reclassification or combination, at the
close of business on the day upon which such corporate action becomes
effective. No adjustment shall be made pursuant to this clause (i) in
connection with any transaction to which Section 10(g) applies.
(ii) In case Borrower shall issue shares of UTC Common Stock (or
rights, warrants or other securities convertible into or exchangeable for
shares of UTC Common Stock) after the Closing Date, other than (A) pursuant
to obligations existing on the date hereof, including, without limitation,
obligations under agreements with existing lenders, outstanding options,
rights, warrants or other securities convertible into or exchangeable for
shares of UTC Common Stock, or pursuant to any existing employee benefit
plan, (B) pursuant to any joint venture or other strategic alliance, with
the prior written consent of Lender, (C) issuances covered by Section
10.01(f)(i), and (D) issuances pursuant to a registration statement under
the Securities Act, for consideration in an amount per share of UTC Common
Stock (or having an exercise, conversion or exchange price per share) less
than an amount equal to 25% below the Current Market Price, then (i) the
number of shares of UTC Common Stock for which the Note is convertible shall
be adjusted to equal the product obtained by multiplying the number of
shares of UTC Common Stock for which the Note is convertible immediately
prior to such issue or sale by a fraction (A) the numerator of which shall
be the number of shares of UTC Common Stock outstanding immediately after
such issue or sale, and (B) the denominator of which shall be the number of
shares of UTC Common Stock outstanding immediately prior to such issue or
sale plus the number of shares which the aggregate offering price of the
total number of such additional shares of UTC Common Stock would purchase at
the then Current Market Price; and (ii) the Conversion Price as to the
number of shares for which this Note is convertible prior to such adjustment
shall be adjusted by multiplying such Conversion Price by a fraction (x) the
numerator of which shall be the number of shares for which this Note is
convertible immediately prior to such issue or sale, and (y) the denominator
of which shall be the number of shares of UTC Common Stock purchasable
immediately after such issue or sale.
(iii) An adjustment made pursuant to Section 10.01(f)(ii) above shall
be made on the next Business Day following the date on which any such
issuance is made and shall be effective retroactively immediately after the
close of business on such date. No
53
adjustment shall be made pursuant to Section 10.01(f)(ii) in respect of any
issuance of shares of UTC Common Stock on or prior to the Closing Date. For
purposes of Section 10.01(f)(ii), the aggregate consideration received by
Borrower in connection with the issuance of shares of UTC Common Stock or of
rights, warrants or other securities exchangeable or convertible into shares
of UTC Common Stock shall be deemed to be equal to the sum of the aggregate
offering price of all such UTC Common Stock and such rights, warrants, or
other exchangeable or convertible securities plus the aggregate amount, if
any, receivable upon exchange or conversion of any such exchangeable or
convertible securities into shares of UTC Common Stock.
(iv) In case Borrower shall at any time or from time to time after the
Closing Date declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of stock or other
securities or property or rights or warrants to subscribe for securities of
Borrower or any of its Subsidiaries by way of dividend or spinoff), on its
UTC Common Stock, other than dividends or distributions of shares of UTC
Common Stock which are referred to in clause (i) above and cash dividends
paid out of retained earnings, then the Conversion Price shall be adjusted
so that it shall equal the price determined by multiplying (A) the
applicable Conversion Price on the day immediately prior to the record date
fixed for the determination of stockholders entitled to receive such
dividend or distribution by (B) a fraction, the numerator of which shall be
the Current Market Price per share of UTC Common Stock on the day
immediately prior to such record date less the amount of such dividend or
distribution per share of UTC Common Stock, and the denominator of which
shall be such Current Market Price per share of UTC Common Stock on the day
immediately prior to such record date. No adjustment shall be made pursuant
to this Section 10.01(f)(iv) in connection with any transaction to which
Section 10.01(g) applies.
(v) For purposes of this Section 10.01(f), the number of shares of UTC
Common Stock at any time outstanding shall not include any shares of UTC
Common Stock then owned or held by or for the account of Borrower or any of
its Subsidiaries.
(vi) If Borrower shall take a record of the holders of its UTC Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the number of
shares of UTC Common Stock issuable upon exercise of the right of conversion
granted by this Section 10.01(f) or in the Conversion Price then in effect
shall be required by reason of the taking of such record.
(vii) Anything in this Section 10.01(f) to the contrary
notwithstanding, Borrower shall not be required to give effect to any
adjustment in the Conversion Price unless and until the net effect of one or
more adjustments (each of which shall be carried forward), determined as
above provided, shall have resulted in a change of the Conversion Price by
at least 1%, and when the cumulative net effect of more than one adjustment
so
54
determined shall be to change the Conversion Price by at least one percent,
such change in Conversion Price shall thereupon be given effect.
(viii) If any option or warrant expires or is canceled without having
been exercised, then, for the purposes of the adjustments set forth above,
such option or warrant shall have been deemed not to have been issued and
the Conversion Price shall be adjusted accordingly. No holder of UTC Common
Stock which was previously issued upon conversion of the Note shall have any
obligation to redeem or cancel any such shares of UTC Common Stock as a
result of the operation of this Section 10.01(f)(viii).
(g) In case of any reorganization of capital, reclassification of
capital stock (other than a reclassification of capital subject to Section
10.01(f)(i)), consolidation or merger with or into another corporation, or sale,
transfer or disposition of all or substantially all the property, assets or
business of Borrower to another corporation (any one or more of such events
being an "Organic Change"), the Note then outstanding, shall thereafter be
convertible into, in lieu of the UTC Common Stock issuable upon such Conversion
prior to consummation of such Organic Change, the kind and amount of shares of
stock and other securities and property receivable (including cash) upon the
consummation of such Organic Change by a holder of that number of shares of UTC
Common Stock into which the Note was convertible immediately prior to such
Organic Change (including, on a pro rata basis, the cash, securities or property
received by holders of UTC Common Stock in any tender or exchange offer that is
a step in such Organic Change). In case securities or property other than UTC
Common Stock shall be issuable or deliverable upon conversion as aforesaid, then
all references in this Section 10.01(g) shall be deemed to apply, so far as
appropriate and nearly as may be, to such other securities or property.
(h) In case at any time or from time to time Borrower shall pay any
stock dividend or make any other non-cash distribution to the holders of its UTC
Common Stock, or shall offer for subscription pro rata to the holders of its UTC
Common Stock any additional shares of stock of any class or any other right, or
there shall be any capital reorganization or reclassification of the UTC Common
Stock of Borrower or consolidation or merger of Borrower with or into another
corporation, or any sale or conveyance to another corporation of the property of
Borrower as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of Borrower,
then, in any one or more of said cases, Borrower shall give at least 20 days'
prior written notice to the registered holder of the Note at the address of each
as shown on the books of Borrower as of the date on which (i) the books of
Borrower shall close or a record shall be taken for such stock dividend,
distribution or subscription rights or (ii) such non-bankruptcy reorganization,
reclassification, consolidation, merger, sale or conveyance, dissolution,
liquidation or winding up shall take place, as the case may be, provided that in
the case of any Organic Change to which Section 10.01(g) applies Borrower shall
give at least 20 days' prior written notice as aforesaid. Such notice shall also
specify the date as of which the holders of the UTC Common Stock of record shall
participate in such dividend, distribution or subscription rights or shall be
entitled to exchange their UTC Common Stock for securities or other property
deliverable upon such non-bankruptcy reorganization, reclassification,
consolidation, merger, sale or conveyance or participate in such dissolution,
liquidation or
55
winding up, as the case may be. Failure to give such notice shall not invalidate
any action so taken.
(i) Upon any adjustment of the Conversion Price then in effect and any
increase or decrease in the number of shares of UTC Common Stock issuable upon
the operation of the conversion set forth in this Section 10.01, then, and in
each such case, Borrower shall promptly deliver to the holder of the Note, a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of Borrower
setting forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the Conversion
Price then in effect following such adjustment and the increased or decreased
number of shares issuable upon the conversion granted by this Section 10.1, and
shall set forth in reasonable detail the method of calculation of each and a
brief statement of the facts requiring such adjustment.
(j) If any event occurs as to which the foregoing provisions of this
Section 10.01 are not strictly applicable or, if strictly applicable, would not,
in the good faith judgment of the Board of Directors of the Borrower, fairly and
adequately protect the conversion rights of the Holder of the Note in accordance
with the essential intent and principles of such provisions, then the Board of
Directors of the Borrower shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary, in the good faith opinion of such Board of Directors of
the Borrower, to protect such purchase rights as aforesaid, but in no event
shall any such adjustment have the effect of increasing the Conversion Price or
decreasing the number of shares of the UTC Common Stock issuable upon the
conversion of the Note.
(k) Notwithstanding any issuance of a Conversion Notice, at any time
prior to the Pricing Date, the Borrower shall have the option to repay the Loan
together with any interest theretofore accrued and unpaid (including additional
interest under Section 1.05(b)). Such payment must be received in full by the
Lender prior to the Pricing Date and otherwise in accordance with the terms of
the Credit Documents. From and after the Pricing Date, the Borrower may not
repay that portion of the Loan that is being converted pursuant to this Section
10.01.
(l) Any shares of UTC Common Stock issued pursuant to this Agreement
(including this Section 10.01 and Section 1.05(b)) shall be entitled to the
benefit of the Registration Rights Agreement.
SECTION 11. Miscellaneous.
11.01 Payment of Expenses, etc. The Borrower shall: (i) whether or not
the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Lender (including, without limitation,
the reasonable fees and disbursements of White & Case LLP and of the Lender's
consultants) in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings (including, in each case
without
56
limitation, the reasonable fees and disbursements of counsel and consultants for
the Lender); (ii) pay and hold the Lender harmless from and against any and all
present and future stamp, excise and other similar documentary taxes with
respect to the foregoing matters and save the Lender harmless from and against
any and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to the Lender) to pay such taxes; and
(iii) indemnify the Lender, and each of its officers, directors, employees,
representatives, agents, affiliates, trustees and investment advisors from and
hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not the Lender is a party thereto and whether or
not such investigation, litigation or other proceeding is brought by or on
behalf of any Credit Party) related to the entering into and/or performance of
this Agreement or any other Credit Document or the use of the proceeds of the
Loan hereunder or the consummation of the Transaction or any other transactions
contemplated herein or in any other Credit Document or the exercise of any of
their rights or remedies provided herein or in the other Credit Documents, or
(b) the actual or alleged presence of Hazardous Materials in the air, surface
water or groundwater or on the surface or subsurface of any Real Property owned,
leased or at any time operated by the Borrower or any of its Subsidiaries, the
generation, storage, transportation, handling or disposal of Hazardous Materials
by the Borrower or any of its Subsidiaries at any location, whether or not
owned, leased or operated by the Borrower or any of its Subsidiaries, the
non-compliance of any Real Property with foreign, federal, state and local laws,
regulations, and ordinances (including applicable permits thereunder) applicable
to any Real Property, or any Environmental Claim asserted against the Borrower,
any of its Subsidiaries or any Real Property owned, leased or at any time
operated by the Borrower or any of its Subsidiaries, including, in each case,
without limitation, the reasonable fees and disbursements of counsel and other
consultants incurred in connection with any such investigation, litigation or
other proceeding (but excluding any losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified (as determined by a court of
competent jurisdiction in a final and non-appealable decision)). To the extent
that the undertaking to indemnify, pay or hold harmless the Lender set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Borrower shall make the maximum contribution to the
payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
11.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, the Lender is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by the Lender to or for the
credit or the account of any Credit Party against and on account of the
Obligations and liabilities of the Credit Parties to the Lender under this
Agreement or under any of the other Credit Documents, and all other claims of
any nature or
57
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not the Lender shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
11.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents; if to the Lender, at its address specified on Schedule II; or,
as to any Credit Party, at such other address as shall be designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall, when mailed, telegraphed, telexed, telecopied, or cabled
or sent by overnight courier, be effective when deposited in the mails,
delivered to the telegraph company, cable company or overnight courier, as the
case may be, or sent by telex or telecopier, except that notices and
communications to the Lender and the Borrower shall not be effective until
received by the Lender or the Borrower, as the case may be.
11.04 Benefit of Agreement; Assignments; Participations. (a) This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto; provided,
however, the Borrower may not assign or transfer any of its rights, obligations
or interest hereunder without the prior written consent of the Lender and,
provided further, that, although the Lender may transfer, assign or grant
participations in its rights hereunder, the Lender shall remain a "Lender" for
all purposes hereunder and the transferee, assignee or participant, as the case
may be, shall not constitute a "Lender" hereunder. In the case of any such
participation, the participant shall not have any rights under this Agreement or
any of the other Credit Documents (the participant's rights against the Lender
in respect of such participation to be those set forth in the agreement executed
by the Lender in favor of the participant relating thereto) and all amounts
payable by the Borrower hereunder shall be determined as if the Lender had not
sold such participation.
(b) Notwithstanding the foregoing, the Lender may (x) assign all or a
portion of its outstanding Obligations hereunder to any affiliate of the Lender
which is at least 50% owned by the Lender or its parent company, provided that,
(i) at such time Schedule I shall be deemed modified to reflect the outstanding
Loan of such new Lender and of the existing Lender, and (ii) upon the surrender
of the Note by the assigning Lender (or, upon such assigning Lender's
indemnifying the Borrower for the lost Note pursuant to a customary
indemnification agreement) new Notes will be issued, at the Borrower's expense,
to such new Lender and to the assigning Lender upon the request of such new
Lender or assigning Lender, such new Notes to be in conformity with the
requirements of Section 1.05 (with appropriate modifications) to the extent
needed to reflect the revised outstanding Loan. To the extent of any assignment
pursuant to this Section 11.04(b), the assigning Lender shall be relieved of its
obligations hereunder with respect to its assigned outstanding Loan.
11.05 No Waiver; Remedies Cumulative. No failure or delay on the part
of the Lender in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between the Borrower or any other
Credit Party and the Lender shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege
58
hereunder or under any other Credit Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Lender would otherwise have. No notice to
or demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Lender to any other or further action
in any circumstances without notice or demand.
11.06 Calculations; Computations; Adjustments; Accounting Terms. (a)
The financial statements to be furnished to the Lender pursuant hereto shall be
made and prepared in accordance with generally accepted accounting principles in
the United States consistently applied throughout the periods involved (except
as set forth in the notes thereto or as otherwise disclosed in writing by the
Borrower to the Lender).
(b) All computations of interest hereunder shall be made on the basis
of a year of 360 days for the actual number of days occurring in the period for
which such interest is payable.
(c) At all times, the rate of interest to be paid hereunder (including,
without limitation, any additional interest payable pursuant to Section 1.05(b)
shall be the lesser of (x) the highest rate of interest provided for in
accordance with the terms hereunder, and (y) the maximum permissible rate of
interest provided for under applicable laws.
11.07 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE
CITY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT, THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT
ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER THE BORROWER, AND AGREES NOT TO
PLEAD OR CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENTS BROUGHT IN ANY OF THE AFOREMENTIONED COURTS, THAT
SUCH COURTS LACK PERSONAL JURISDICTION OVER THE BORROWER. THE BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS
SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER
59
SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT
DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE BORROWER IN ANY OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
11.08 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Lender.
11.09 Effectiveness. This Agreement shall become effective on the date
(the "Closing Date") on which (i) the Borrower and the Lender shall have signed
a counterpart hereof (whether the same or different counterparts) and shall have
delivered the same to the Lender at the Notice Office, and (ii) each of the
conditions precedent set forth in Section 4 has been satisfied to the reasonable
satisfaction of the Lender or waived with the consent of the Lender. The Lender
will give the Borrower prompt written notice of the occurrence of the Closing
Date.
11.10 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
11.11 Amendment or Waiver; etc. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated
60
unless such change, waiver, discharge or termination is in writing signed by the
respective Credit Parties party thereto and the Lender.
11.12 Survival. All indemnities set forth herein including, without
limitation, in Sections 3.04 and 11.01 shall survive the execution, delivery and
termination of this Agreement and the Note and the making and repayment of the
Obligations.
11.13 Domicile of Loan. The Lender may transfer and carry its Loan at,
to or for the account of any office, Subsidiary or Affiliate of the Lender.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of the Loan pursuant to this Section 11.13 would, at the time of such
transfer, result in increased costs under Section 3.04 from those being charged
by the Lender prior to such transfer, then the Borrower shall not be obligated
to pay such increased costs (although the Borrower shall be obligated to pay any
other increased costs of the type described above resulting from changes after
the date of the respective transfer).
11.14 Confidentiality. (a) Subject to the provisions of clause (b) of
this Section 11.14, the Lender agrees that it will use its reasonable efforts
not to disclose without the prior consent of the Borrower (other than to its
employees, auditors, advisors or counsel or to another Lender if the Lender or
the Lender's holding or parent company in its sole discretion determines that
any such party should have access to such information, provided such Persons
shall be subject to the provisions of this Section 11.14 to the same extent as
such Lender) any information with respect to the Borrower or any of its
Subsidiaries which is now or in the future furnished pursuant to this Agreement
or any other Credit Document and which is designated by the Borrower to the
Lender in writing as confidential, provided that the Lender may disclose any
such information (i) as has become generally available to the public other than
by virtue of a breach of this Section 11.14(a) by the Lender, (ii) as may be
required or appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Lender or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (iii) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation, (iv) in order to comply with any law, order, regulation or ruling
applicable to the Lender, and (v) to any prospective or actual transferee or
participant in connection with any contemplated transfer or participation of any
of the Note or Commitment or any interest therein by the Lender, provided that
such prospective transferee or participant agrees to be bound by the
confidentiality provisions contained in this Section 11.14.
(b) The Borrower hereby acknowledges and agrees that the Lender may
share with any of its affiliates, and such affiliates may share with the Lender
any information related to the Borrower or any of its Subsidiaries (including,
without limitation, any non-public customer information regarding the
creditworthiness of the Borrower and its Subsidiaries), provided such Persons
shall be subject to the provisions of this Section 11.14 to the same extent as
the Lender.
11.15 Register. The Borrower hereby designates the Lender to serve as
the Borrower's agent, solely for purposes of this Section 11.15, to maintain a
register (the "Register") on which it will record the Commitment from time to
time of the Lender, the Loans made by the Lender and each repayment in respect
of the principal amount of the Loan. Failure
61
to make any such recordation, or any error in such recordation, shall not affect
the Borrower's obligations in respect of such Loans. With respect to the Lender,
the transfer of the Commitment of the Lender and the rights to the principal of,
and interest on, the Loan made pursuant to such Commitment shall not be
effective until such transfer is recorded on the Register maintained by the
Lender with respect to ownership of such Commitment and Loan and prior to such
recordation all amounts owing to the transferor with respect to such Commitment
and Loan shall remain owing to the transferor. The registration of assignment or
transfer of all or part of any Commitment and Loan shall be recorded by the
Lender on the Register only upon the acceptance by the Lender of a properly
executed and delivered assignment and assumption agreement in form and substance
satisfactory to the Lender. Coincident with the delivery of such an assignment
and assumption agreement to the Lender for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Lender shall surrender the Note (if
any) evidencing the Loan, and thereupon one or more new Notes in the same
aggregate principal amount shall be issued to the assigning or transferor Lender
and/or the new Lender at the request of any such Lender. The Borrower agrees to
indemnify the Lender from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Lender in performing its duties under this Section 11.15.
* * *
62
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
0 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000 UNIROYAL TECHNOLOGY CORPORATION
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Xx.
Telephone No.: (000) 000-0000 By/s/Xxxxxx X. Xxxxxxx Xx.
Telecopier No.: (000) 000-0000 ------------------------------------
Title: Executive Vice President,
Treasurer and Chief Financial
Officer
145 BELMONT DRIVE, EMCORE CORPORATION
XXXXXXXX, XXX XXXXXX 00000
Attn: Xx Xxxxxx Xxxxxxx
Telephone No.: (000) 000-0000 By/s/Xxxxxx Xxxxxxx
Telecopier No.: (000) 000-0000 ------------------------------------
Title: Chief Financial Officer
SCHEDULE I
COMMITMENTS
Lender Commitment
Emcore Corporation $5,000,000.00
----------------------
TOTAL: $5,000,000.00
SCHEDULE II
LENDER ADDRESS
Lender Address
EMCORE Corporation 000 XXXXXXX XXXXX,
XXXXXXXX, XXX XXXXXX 00000
Attn: Xx. Xxxxxx Xxxxxxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
SCHEDULE III
PLANS
1. Uniroyal Technology Corporation Savings Plan
2. Uniroyal Technology Corporation Savings Plan A
3. Uniroyal Technology Corporation 401(k) Plan for Polycast Technology Wage
Employees, Stamford, Connecticut
* * *
SCHEDULE IV
REAL PROPERTY
Owned
None.
Leased
1. Location: 0000 Xxxxxxxx Xxxxx, Xxxxx, Xxxxxxx
Lessee: Uniroyal Optoelectronics, LLC
Lessor: ProLogis Trust, 000-X Xxxxxx Xxxx, Xxxxx, XX 00000
Term: August 1, 1998 - July 31, 2008
2. Location: 00000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx
Lessee: Sterling Semiconductor, Inc.
Lessor: ProLogis Trust, 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx,
XX 00000
Term: March 1, 2001 - February 28, 2006
3. Location: 000 Xxxxx, Xxxxx Xxxxxx, Xxxxxxxx
Lessee: NorLux Corp.
Lessor: AC Investments, LLC, 000 X. Xxxx, Xxxxx 000, Xxxxxxxxxxxx, XX
00000
Term: August 1, 2000 - July 31, 2005
4. Location: 0 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxx
Lessee: Sterling Semiconductor, Inc.
Lessor: Advanced Technology Materials, Inc.
Term: Expires September 30, 2004 (pursuant to a sharing agreement)
* * *
SCHEDULE V
SUBSIDIARIES
1. Uniroyal Technology Corporation (Delaware, Florida)
A. Each of the following are Wholly-Owned Subsidiaries of
Uniroyal Technology Corporation:
(i) Uniroyal HPP Holdings, Inc. (Delaware)
(ii) UnitechNJ, Inc. (Delaware, New Jersey)
(iii) UnitechOH, Inc. (Ohio)
(iv) Uniroyal Compound Semiconductors, Inc. (Delaware)
- fka Uniroyal Optoelectronics, Inc. (Delaware)
- fka Xxxxxxxx Plastics, Inc. (Delaware)
(v) BayPlas7, Inc. (Delaware)
(vi) BayPlas3, Inc. (Delaware)
(vii) High Performance Plastics, Inc. (Delaware)
(viii) Uniroyal Optoelectronics Service Corporation
(Delaware) - fka Polycast Plastics Corporation
(Delaware)
(ix) Sterling Semiconductor, Inc. (Delaware)
- fka BayPlas6, Inc. (Delaware)
(x) Uniroyal Engineered Products, LLC (Delaware)
B. Each of the following is a non-Wholly-Owned Subsidiary of
Uniroyal Technology Corporation (the percentage ownership of
Uniroyal Technology Corporation in all of respective classes
of common stock (or membership interests, as the case may be)
of each Subsidiary is indicated in square brackets appearing
after the name thereof below):
(i) Uniroyal Optoelectronics, LLC (Delaware) [64%]
(provided, however, that following the consummation
of the Sale, Uniroyal Technology Corporation shall
own 100%)
(ii) Uniroyal Liability Management Company, Inc.
(Delaware) - fka ULC Corp.
Schedule V
Page 2
(iii) BayPlas2, Inc. (Delaware) [69%]
2. Uniroyal HPP Holdings, Inc. (Delaware)
The above entity has one Subsidiary:
High Performance Plastics, Inc.
3. UnitechNJ, Inc. (Delaware, New Jersey)
The above entity has no Subsidiaries.
4. UnitechOH, Inc. (Ohio)
The above entity has no Subsidiaries.
5. Uniroyal Compound Semiconductors, Inc. (Delaware)
- fka Uniroyal Optoelectronics, Inc. (Delaware)
- fka Xxxxxxxx Plastics, Inc. (Delaware)
The above entity has four Subsidiaries:
Uniroyal Optoelectronics Service Corporation
NorLux Corp.
Sterling Semiconductor, Inc.
Uniroyal Optoelectronics, Inc.
6. BayPlas7, Inc. (Delaware)
The above entity has no Subsidiaries.
7. BayPlas3, Inc. (Delaware)
The above entity has no Subsidiaries.
8. Uniroyal Liability Management Company, Inc. (Delaware)
- fka ULC Corp.
The above entity has one Subsidiary:
BayPlas2., Inc.
9. High Performance Plastics, Inc. (Delaware)
The above entity has no Subsidiaries.
10. Uniroyal Optoelectronics Service Corporation (Delaware)
- fka Polycast Plastics Corporation (Delaware)
The above entity has no Subsidiaries.
11. Uniroyal Optoelectronics, LLC (Delaware)
The above entity has no Subsidiaries.
Schedule V
Page 3
12. Sterling Semiconductor, Inc. (Delaware)
- fka BayPlas6, Inc. (Delaware)
The above entity has no Subsidiaries.
13. Uniroyal Engineered Products, LLC (Delaware)
The above entity has no Subsidiaries.
14. BayPlas2, Inc. (Delaware)
The above entity has no Subsidiaries.
* * *
SCHEDULE VI
EXISTING INDEBTEDNESS
See attached Schedule.
SCHEDULE VII
INSURANCE
See attached Summary of Insurance and Certificates.
SCHEDULE VIII
EXISTING LIENS
See attached Lien Schedule.
SCHEDULE IX
EXISTING INVESTMENTS
None.
SCHEDULE X
[Intentionally Omitted].
SCHEDULE XI
EXISTING AFFILIATE TRANSACTIONS
None.
SCHEDULE 4.07
ADVERSE CHANGE, ETC.
1. As of October 1, 2000, the Borrower and its Subsidiaries held
$57,952,000 in cash and Cash Equivalents and short and long term
investments, whereas as of July 1, 2001, the Borrower and its
Subsidiaries held $9,154,000 in cash and Cash Equivalents and short and
long term investments; and
2. For the fiscal year ended October 1, 2000, the consolidated loss from
continuing operations of the Borrower and its Subsidiaries was
$10,659,000, whereas for the period commencing after the fiscal year
last ended up to and including July 1, 2001, the consolidated loss from
continuing operations of the Borrower and its Subsidiaries was
$17,768,000.
EXHIBIT A
FORM OF NOTICE OF BORROWING
August ____, 2001
EMCORE Corporation
as Lender party
to the Credit Agreement
referred to below
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx, 00000
Attention: Xx Xxxxxx Xxxxxxx
Ladies and Gentlemen:
The undersigned, Uniroyal Technology Corporation (the "Borrower"),
refers to the Credit Agreement, dated as of August __, 2001 (as amended,
modified or supplemented from time to time, the "Credit Agreement," the terms
defined therein being used herein as therein defined), among the Borrower and
you, as Lender, and hereby gives you notice, irrevocably, pursuant to Section
1.02 of the Credit Agreement, that the undersigned hereby requests the Borrowing
of the Loan under the Credit Agreement, and in that connection sets forth below
the information relating to the Borrowing (the "Proposed Borrowing") as required
by Section 1.02 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ____________.1
(ii) The aggregate principal amount of the Proposed Borrowing is
$____________.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit
Agreement and in the other Credit Documents are and will be true and correct in
all material respects, both before and after giving effect to the Proposed
Borrowing and to the application of the proceeds thereof, as though made on such
date, unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date; and
----------------------
1 Any such notice shall be deemed to have been given on a certain day only
if given before 11:00 A.M. (New York time) on such day.
Exhibit A
Page 2
(B) no Default or Event of Default has occurred and is continuing, or
would result from such Proposed Borrowing or from the application of the
proceeds thereof.
Very truly yours,
UNIROYAL TECHNOLOGY CORPORATION
By
---------------------------------
Name:
Title:
EXHIBIT B
FORM OF NOTE
$________ New York, New York
August ___, 2001
FOR VALUE RECEIVED, UNIROYAL TECHNOLOGY CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to ____________ or its registered assigns
(the "Lender"), in lawful money of the United States of America in immediately
available funds, at the office of EMCORE Corporation located at 000 Xxxxxxx
Xxxxx, Xxxxxxxx, Xxx Xxxxxx, 00000, on the Final Maturity Date (as defined in
the Credit Agreement referred to below) the principal sum of _____________
DOLLARS ($_____) or, if less, the unpaid principal amount of the Loan (as
defined in the Credit Agreement) made by the Lender pursuant to the Credit
Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.05 of the Credit Agreement.
This Note is the Note referred to in the Credit Agreement, dated as of
August __, 2001, among the Borrower and the Lender (as amended, modified or
supplemented from time to time, the "Credit Agreement") and is entitled to the
benefits thereof and of the other Credit Documents (as defined in the Credit
Agreement). This Note is secured by the Security Documents (as defined in the
Credit Agreement) and is entitled to the benefits of the Subsidiaries Guaranty
(as defined in the Credit Agreement). This Note is subject to voluntary
prepayment and mandatory repayment prior to the Final Maturity Date, in whole or
in part, as provided in the Credit Agreement.
If an Event of Default (as defined in the Credit Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may become
or be declared to be due and payable in the manner and with the effect provided
in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
Exhibit B
Page 2
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
UNIROYAL TECHNOLOGY CORPORATION
By
---------------------------------
Name:
Title:
EXHIBIT C
UNIROYAL TECHNOLOGY CORPORATION
SUITE 000
XXX XXXXX XXXXXXX XXXXX
XXXXXXXX, XXXXXXX 00000
XXXXXX X. XXXXXX Telephone: (000) 000-0000
EXECUTIVE VICE PRESIDENT, Fax: (000) 000-0000
GENERAL COUNSEL & SECRETARY xxxxxx.xxxxxx@xxxxxxxxxxxx.xxx
August 2, 2001
To the Lender party to the Credit
Agreement referred to below:
Ladies and Gentlemen:
I am issuing this opinion letter in my capacity as general legal counsel to
Uniroyal Technology Corporation, a Delaware corporation (the "Borrower") and to
Uniroyal Optoelectronics Service Corporation, a Delaware corporation, NorLux
Corp., a Delaware corporation, Uniroyal Optoelectronics, LLC, a Delaware limited
liability company ("UOE") and Sterling Semiconductor, Inc., a Delaware
corporation (each a "Subsidiary" and, together with the Borrower, collectively
referred to herein as the "Credit Parties") in response to the requirement in
Section 4.03 of the Credit Agreement (the "Credit Agreement"), dated as of the
date hereof, by and among the Borrower and EMCORE Corporation, as Lender (the
"Lender") (the Lender being herein called "you"). The term "Transaction
Documents" whenever it is used in this letter means the Credit Agreement and the
following additional documents as in effect on the date hereof: (a) the Note,
(b) the Security Agreement, (c) Control Agreement, (d) the Subsidiaries
Guaranty, and (e) the Uniform Commercial Code financing statements (form UCC-1)
in the form attached hereto as Annex I (the "Financing Statements"). Items (a),
(b), (c), (d) and the Credit Agreement are collectively referred to herein as
the "Credit Documents". Unless otherwise indicated, capitalized terms used
herein but not otherwise defined herein have the respective meanings set forth
in the Credit Agreement.
In rendering the opinions set forth below, I have examined and
reviewed copies of the following documents:
(i) the incorporation documents of each of the Credit Parties,
(ii) the by-laws or other constituent documents of each of the Credit
Parties,
(iii) all minutes of the shareholders and the board of directors or
the board of managers, as the case may be, of each of the Credit Parties, and
(iv) the Credit Documents, the Financing Statements and all exhibits
and schedules attached thereto and all other documents delivered pursuant
thereto or in connection therewith.
I have also examined such other records and documents and made such
other investigations of law and fact as I have deemed necessary or advisable in
order to express the following opinions.
Subject to the foregoing and to the assumptions, qualifications,
exclusions and other limitations which are identified in this letter, I advise
you, and with respect to each legal issue addressed in this letter, it is my
opinion, that:
1. (i) Each of the Credit Parties (other than UOE) is a corporation
existing and in good standing under the laws of the State of Delaware, (ii)
UOE is a limited liability company existing and in good standing under the
laws of the State of Delaware and (iii) each of the Credit Parties has the
corporate power, or limited liability company power, as applicable, to own
its property and assets of which I am aware and to transact the business in
which, to my knowledge, it is engaged or presently proposes to engage.
2. Each Credit Party has the corporate power, or limited liability
company power, as applicable, to enter into the Credit Documents and the
Financing Statements to which it is a party and to perform its obligations
under each such Credit Document.
3. Each Credit Party's Board of Directors (in the case of UOE, Board
of Managers) has duly authorized the execution, delivery and performance by
such Credit Party of the Credit Documents and the Financing Statements to
which it is a party and no other corporate action, or limited liability
company action, as applicable, on the part of such Credit Party is required
in connection with the authorization of such execution, delivery and
performance of such Credit Documents and the Financing Statements.
4. Each Credit Party has duly executed and delivered the Credit
Documents and the Financing Statements to which it is a party.
5. Each of the Credit Documents and the Financing Statements to which
any Credit Party is a party is a valid and binding obligation of such
Credit Party and is enforceable against such Credit Party in accordance
with its terms, as the same may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of rights of
creditors generally, (b) as the same may be limited by general principles
of equity, and (c) that a remedy of specific performance and injunctive
relief and other forms of relief may be subject to equitable defenses and
to the discretion of the court before which any proceedings may be brought.
6. The execution and delivery of the Credit Documents and the
Financing Statements and performance by each Credit Party of its
obligations, if any, under the Credit Documents and the Financing
Statements to which it is a party, will not (a) violate
2
any existing provisions of such Credit Party's Certificate of
Incorporation, Bylaws or other constituent documents, (b) constitute a
violation by such Credit Party of any applicable provision of existing
statutory law or governmental regulation covered by this letter, (c)
violate any existing order, writ, injunction or decree applicable to such
Subsidiary of any court or governmental instrumentality or (d) constitute a
violation or a breach under the Transaction Documents or (e) constitute a
violation or breach under any agreement to which the Borrower or any of its
Subsidiaries is a party to as of the Closing Date.
7. There are no actions, suits or proceedings (private or
governmental) pending or threatened (i) with respect to the Transaction or
any Document or (ii) that, either individually or in the aggregate, could
reasonably be expected to have a material adverse effect on the business,
property, assets, liabilities (actual or contingent), operations or
condition (financial or otherwise) of the Borrower and its Subsidiaries
taken as a whole.
8. No Credit Party is presently required to obtain any consent,
approval, authorization or order of any court or governmental agency in
order to obtain the right to enter into any of the Credit Documents and the
Financing Statements or to take any of the actions, if any, taken by such
Credit Party in connection with the consummation of the transactions
contemplated by the Credit Documents and the Financing Statements, except
for: (a) those obtained or made on or prior to the date hereof, (b) any
actions or filings to perfect the liens and security interests granted
under the Credit Documents, (c) actions or filings required in connection
with ordinary course conduct by such Credit Party of its business and
ownership or operation by such Credit Party of its assets, and (d) actions
and filings required under any provision of any law or regulation not
covered by this opinion.
9. The Security Agreement creates in favor of the Lender for its own
account, as security for the payment of the secured obligations described
therein, a valid security interest in the Collateral described therein;
provided, further, without limiting the foregoing except with respect to
Collateral consisting of the deposit accounts, the Control Agreement and
the Security Agreement are effective to create a valid perfected first
priority security interest in the Collateral consisting of the deposits
accounts. There is no adverse claim to the Collateral Account, the deposit
accounts of any Credit Party or any funds respectively deposited therein.
10. I have examined the Financing Statements to be filed in the filing
offices in the State of Delaware and the State of Florida (the "Filing
Offices"), and upon the filing of such Financing Statements in the Filing
Offices, all filings, registrations and recordings necessary or appropriate
to create, maintain, preserve, protect and perfect the security interests
granted by each Credit Party to the Lender under the Security Agreement in
respect of all the Collateral thereunder will have been accomplished and
the security interests granted to the Lender pursuant to the Security
Agreement in and to such
3
Collateral will constitute a perfected security interest therein in each
case to the extent that such Collateral consists of the type of property in
which a security interest may be perfected by filing a financing statement
under the Uniform Commercial Code (the "UCC") as in effect in each of the
States of the United States of America as of the date hereof. The only
filings of UCC financing statements required to protect the security
interests granted therein are the filings being made in the jurisdiction of
organization of the respective Credit Party.
11. No Credit Party is an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
12. No Credit Party is a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
13. To the best of my knowledge (based solely upon lien searches,
inquiries of officers of the Credit Parties and the certificates executed
and delivered to me by officers of the Credit Parties), (i) there are no
actions, suits or proceedings pending or threatened against such Credit
Parties with respect to any of the Transaction Documents and (ii) there
does not exist any judgment, order or injunction prohibiting or imposing
any material adverse condition upon the consummation of the Transaction.
14. The shares of equity securities to be issued upon conversion of
the Note pursuant to Section 10 of the Credit Agreement (the "Conversion
Shares") have been duly authorized and validly reserved for issuance in
contemplation of conversion of the Note and, when issued and delivered in
accordance with the Note, will have been validly issued, fully paid and
non-assessable. The Lender will acquire good and marketable title to the
Conversion Shares upon conversion of the Note in accordance with Section 10
of the Credit Agreement, free and clear of any and all Liens, except such
Liens as may exist under the Credit Documents. The initial issuance of the
Conversion Shares in accordance with the terms of the Credit Documents will
be exempt from the requirements for registration under the Securities Act
of 1933, as amended.
My advice on every legal issue addressed in this letter is based
exclusively on the internal laws of New York and Florida, the Delaware General
Corporation Law and the Delaware Limited Liability Company Act or the federal
law of the United States. The advice expressed herein as to the Delaware Uniform
Commercial Code shall be deemed correct under Delaware law if such advice would
have been correct under New York or Florida law. I advise you that issues
addressed by this letter may be governed in whole or in part by other laws, but
I express no opinion as to whether any relevant difference exists between the
laws upon which my opinions are based and any other laws which may actually
govern.
* * *
4
This letter speaks as of the time of its delivery on the date it
bears. The advice set forth herein is expressed solely for your benefit and may
not be relied upon by any other person or entity, or for any other purpose,
without my prior written consent.
Very truly yours,
By:
---------------------
Xx Xxxxxx X. Xxxxxx
5
EXHIBIT D
FORM OF OFFICERS' CERTIFICATE
I, the undersigned, [Chairman of the Board/President/Vice President] of
[Name of Credit Party], a corporation organized and existing under the laws of
the State of Delaware (the "Company"), do hereby certify on behalf of the
Company that:
1. This Certificate is furnished pursuant to Section[s 4.02 and]
4.04(a) of the Credit Agreement, dated as of August __, 2001, among [Uniroyal
Technology Corporation] [the Company], and EMCORE Corporation, as Lender (such
Credit Agreement, as in effect on the date of this Certificate, being herein
called the "Credit Agreement"). Unless otherwise defined herein, capitalized
terms used in this Certificate shall have the meanings set forth in the Credit
Agreement.
2. The following named individuals are elected officers of the Company,
each holds the office of the Company set forth opposite his or her name and has
held such office since January 1, 2001. The signature written opposite the name
and title of each such officer is his or her genuine signature.
Name2 Office Signature
-------------- ----------- -------------
-------------- ----------- -------------
-------------- ----------- -------------
3. Attached hereto as Exhibit A is a certified copy of the [Certificate
of Incorporation] [Articles of Incorporation] of the Company, as filed in the
Office of the Secretary of State of the State of _________ on ___________,
[19/20]__, together with all amendments thereto adopted through the date hereof.
4. Attached hereto as Exhibit B is a true and correct copy of the
ByLaws of the Company which were duly adopted, are in full force and effect on
the date hereof, and have been in effect since _____________, [19/20]__.
5. Attached hereto as Exhibit C is a true and correct copy of
resolutions which were duly adopted on __________, [19/20]__ by a meeting of the
Board of Directors of the Company at which a quorum was present and acting
throughout, and said resolutions have not been rescinded, amended or modified.
Except as attached hereto as Exhibit C, no resolutions have been adopted by the
Board of Directors of the Company which deal with the execution, delivery or
performance of any of the Documents to which the Company is party.
[6. On the date hereof, all of the applicable conditions set forth in
Sections 4.06, 4.07, 4.08 and 4.16 of the Credit Agreement have been satisfied.
7. Attached hereto as Exhibit D are true and correct copies of all Sale
Documents.
-----------------------
2 Include name, office and signature of each officer who will sign any Credit
Document, including the officer who will sign the certification at the end
of this Certificate or related documentation.
Exhibit D
Page 2
8. Attached hereto as Exhibit H are true and correct copies of all
Plans.
9. Attached hereto as Exhibit I are true and correct copies of all
Shareholders' Agreements.
10. Attached hereto as Exhibit J are true and correct copies of all
Management Agreements.
11. Attached hereto as Exhibit K are true and correct copies of all
Employment Agreements.
12. Attached hereto as Exhibit L are true and correct copies of all
Non-Compete Agreements.
13. Attached hereto as Exhibit M are true and correct copies of all
Collective Bargaining Agreements.
14. Attached hereto as Exhibit N are true and correct copies of all Tax
Sharing Agreements.
15. Attached hereto as Exhibit O are true and correct copies of all
Existing Indebtedness Agreements.]3
[6][16]. On the date hereof, the representations and warranties
contained in the Credit Agreement and in the other Credit Documents are true and
correct with the same effect as though such representations and warranties had
been made on the date hereof, both before and after giving effect to the
incurrence of Loans on the date hereof and the application of the proceeds
thereof, unless stated to relate to a specific earlier date, in which case such
representations and warranties were true and correct in all material respects as
of such earlier date.
[7][17]. On the date hereof, no Default or Event of Default has
occurred and is continuing or would result from the Borrowing to occur on the
date hereof or from the application of the proceeds thereof.
[8][18]. There is no proceeding for the dissolution or liquidation of
the Company or threatening its existence.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of ____,
2001.
[Name of Credit Party]
By
---------------------------------
Name:
Title:
--------------------
3 Insert bracketed items 6 through 15 only in the Officers' Certificate of
the Borrower.
Exhibit D
Page 3
I, the undersigned, Secretary of the Company, do hereby certify on
behalf of the Company that:
1. [Name of Person making above certifications] is the duly elected and
qualified [Chairman of the Board/President/Vice President] of the Company and
the signature above is his or her genuine signature.
2. The certifications made by [name of Person making above
certifications] on behalf of the Company in Items 2, 3, 4, 5, and [8][18] above
are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of _____,
2001.
[Name of Credit Party]
By
---------------------------------
Name:
Title:
EXHIBIT E
SECURITY AGREEMENT
among
UNIROYAL TECHNOLOGY CORPORATION AND
CERTAIN SUBSIDIARIES OF UNIROYAL TECHNOLOGY CORPORATION,
PARTY HERETO FROM TIME TO TIME
and
EMcore Corporation,
as ASSIGNEE
--------------------------------
Dated as of August 2, 2001
--------------------------------
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of August 2, 2001, made by each of the
undersigned assignors (each an "Assignor" and, together with any other entity
that becomes an assignor hereunder pursuant to Section 8.11 hereof, the
"Assignors") in favor of EMCORE Corporation, as Assignee (the "Assignee"), for
its own benefit. Except as otherwise defined herein, all capitalized terms used
herein and defined in the Credit Agreement (as defined below) shall be used
herein as therein defined.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Uniroyal Technology Corporation, as Borrower, and the
Assignee, as Lender, have entered into a Credit Agreement, dated as of August 2,
2001 (as amended, modified, extended, renewed, replaced, restated, supplemented
or refinanced from time to time, and including any agreement extending the
maturity of, or refinancing or restructuring (including, but not limited to, the
inclusion of additional borrowers or guarantors thereunder or any increase in
the amount borrowed) all or any portion of, the indebtedness under such
agreement or any successor agreement, the "Credit Agreement"), providing for the
making of the Loan to the Borrower as contemplated therein;
WHEREAS, it is a condition precedent to the making of the Loan to the
Borrower under the Credit Agreement that each Assignor shall have executed and
delivered to the Assignee this Agreement; and
WHEREAS, each Assignor will obtain benefits from the incurrence of the
Loan by the Borrower under the Credit Agreement and, accordingly, each Assignor
desires to enter into this Agreement in order to satisfy the condition described
in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties to the
Assignee and hereby covenants and agrees with the Assignee as follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of its Obligations, each
Assignor does hereby assign and transfer unto the Assignee, and does hereby
pledge and grant to the Assignee, a continuing security interest in all of the
right, title and interest of such Assignor in, to and under the following
property of such Assignor of, whether now existing or hereafter from time to
time acquired or such other property as may be specified in a schedule added to
this Agreement for a particular Assignor: (i) each and every Receivable, (ii)
all Inventory, (iii) the Equipment
specified on Schedule 1 hereto, (iv) all cash, (v) the Collateral Account and
all monies, securities, instruments and other investments deposited or required
to be deposited in the Collateral Account, (vi) all other bank, demand, deposit,
time savings, cash management, passbook, certificates of deposit and similar
accounts maintained by such Assignor and all monies, securities, instruments and
other investments deposited or required to be deposited in any of the foregoing
accounts, and (vii) all Proceeds and products of any and all of the foregoing
(all of the above, collectively, the "Collateral").
(b) The security interest of the Assignee under this Agreement extends
to all Collateral which any Assignor may acquire at any time during the term of
this Agreement.
(c) Notwithstanding anything to the contrary contained in this Section
1.1 or elsewhere in this Agreement, each of the parties hereto acknowledges and
agrees that the security interest granted pursuant to this Section 1.1 to the
Assignee for the benefit of Senior Creditors shall be a first priority senior
security interest in the Collateral.
1.2. Power of Attorney. Each Assignor hereby constitutes and appoints
the Assignee its true and lawful attorney, irrevocably, with full power after
the occurrence of and during the continuance of an Event of Default (in the name
of such Assignor or otherwise) to act, require, demand, receive, compound and
give acquaintance for any and all moneys and claims for moneys due or to become
due to such Assignor under or arising out of the Collateral, to endorse any
checks or other instruments or orders in connection therewith and to file any
claims or take any action or institute any proceedings which the Assignee may
deem to be necessary or advisable to protect the interests of the Assignee,
which appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
2.1. Necessary Filings. All filings, registrations, recordings and
other actions necessary or appropriate to create, preserve and perfect the
security interest granted by such Assignor to the Assignee hereby in respect of
the Collateral have been accomplished and the security interest granted to the
Assignee pursuant to this Agreement in and to the Collateral creates a valid,
and together with all such filings, registrations, recordings and other actions,
a perfected security interest therein prior to the rights of all other Persons
therein and subject to no other Liens (other than Permitted Liens) and is
entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests, in each case to the extent that the Collateral
consists of the type of property in which a security interest may be perfected
by possession or control (within the meaning of the UCC as in effect on the date
hereof in the State of New York), by
filing a financing statement under the Uniform Commercial Code as enacted in any
relevant jurisdiction.
2.2. No Liens. Such Assignor is, and as to Collateral acquired by it
from time to time after the date hereof such Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any Person (other than Permitted Liens), and such Assignor
shall defend the Collateral against all claims and demands of all Persons at any
time claiming the same or any interest therein adverse to the Assignee.
2.3. Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens), and so long as the Termination Date has not occurred, such
Assignor will not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by such Assignor or in connection with
Permitted Liens.
2.4. Chief Executive Office, Record Locations. The chief executive
office of such Assignor is located at the address indicated on Annex A hereto
for such Assignor. Such Assignor will not move its chief executive office except
to such new location as such Assignor may establish in accordance with the last
sentence of this Section 2.4. The originals of all documents evidencing all
Receivables of such Assignor and the only original books of account and records
of such Assignor relating thereto are, and will continue to be, kept at such
chief executive office, at one or more of the other locations set forth on Annex
A hereto or at such new locations as such Assignor may establish in accordance
with the last sentence of this Section 2.4. All Receivables of such Assignor
are, and will continue to be, maintained at, and controlled and directed
(including, without limitation, for general accounting purposes) from, the
office locations described above or such new location established in accordance
with the last sentence of this Section 2.4. No Assignor shall establish new
locations for such offices until (i) it shall have given to the Assignee not
less than 15 days' prior written notice of its intention to do so, clearly
describing such new location and providing such other information in connection
therewith as the Assignee may reasonably request, and (ii) with respect to such
new location, it shall have taken all action reasonably satisfactory to the
Assignee to maintain the security interest of the Assignee in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
2.5. Location of Inventory and Equipment. All Inventory and Equipment
that constitutes Collateral held on the date hereof by each Assignor is located
at one of the locations shown on Annex B hereto for such Assignor. To the extent
that any Assignor desires to establish a new location for Inventory and
Equipment that constitutes Collateral that is located in Alabama, Connecticut,
Florida or Mississippi, such Assignor only may do so if (i) it shall have given
to the Assignee not less than 15 days' prior written notice of its intention so
to do, clearly describing such new location and providing such other information
in connection therewith as
the Assignee may reasonably request, and (ii) with respect to such new location,
it shall have taken all action reasonably satisfactory to the Assignee to
maintain the security interest of the Assignee in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect;
provided, however, (x) from and after October 1, 2001, the provisions of this
sentence shall not be applicable if such new location is located in Connecticut
and (y) from and after January 1, 2002, the provisions of this sentence shall
not be applicable if such new location is located in Alabama, Florida or
Mississippi.
2.6. Legal Names; Organizational Identification Number; Trade Names;
Change of Name; etc. The legal name of each Assignor, and the organizational
identification number (if any) of each Assignor, is listed on Annex C hereto for
such Assignor. No Assignor has or operates in any jurisdiction under, or in the
preceding five years has had or has operated in any jurisdiction under, any
trade names, fictitious names or other names except its legal name and such
other trade or fictitious names as are listed on Annex C hereto for such
Assignor. No Assignor shall change its legal name, organizational identification
number (if any) or assume or operate in any jurisdiction under any trade,
fictitious or other name except its legal name, organizational identification
number and those trade names in each case listed on Annex C hereto for such
Assignor and those that may be established in accordance with the immediately
succeeding sentence of this Section 2.6. No Assignor shall change its legal name
or organizational identification number or assume or operate in any jurisdiction
under any new trade, fictitious or other name until (i) it shall have given to
the Assignee not less than 15 days' prior written notice of its intention so to
do, clearly describing such new name and the jurisdictions in which such new
name shall be used and providing such other information in connection therewith
as the Assignee may reasonably request, and (ii) with respect to such new name,
it shall have taken all action reasonably requested by the Assignee to maintain
the security interest of the Assignee in the Collateral intended to be granted
hereby at all times fully perfected and in full force and effect. In addition,
to the extent that any Assignor does not have an organizational identification
number on the date hereof and later obtains one, such Assignor shall promptly
thereafter notify the Assignee of such organizational identification number and
shall take all actions reasonably satisfactory to the Assignee to the extent
necessary to maintain the security interest of the Assignee in the Collateral
intended to be granted hereby fully perfected and in full force and effect.
2.7. Jurisdiction and Type of Organization. The jurisdiction of
organization of each Assignor, and the type of organization of each Assignor, is
listed on Annex D hereto for such Assignor. No Assignor shall change its
jurisdiction of organization or its type of organization until (i) it shall have
given to the Assignee not less than 15 days' prior written notice of intention
so to do, clearly describing such new jurisdiction of organization and/or type
of organization and providing such other information in connection therewith as
the Assignee may reasonably request and (ii) with respect to such new
jurisdiction of organization and/or type of organization, it shall have taken
all actions reasonably requested by the Assignee to maintain the security
interest of the Assignee in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect.
2.8. Collateral in the Possession of a Bailee. If any Inventory is at
any time in the possession of a bailee, the respective Assignor shall promptly
notify the Assignee thereof and, if requested by the Assignee, shall promptly
obtain an acknowledgment from such bailee, in form and substance reasonably
satisfactory to the Assignee, that the bailee holds such Collateral for the
benefit of the Assignee and shall act upon the instructions of the Assignee,
without the further consent of the respective Assignor. The Assignee agrees with
the Assignors that the Assignee shall not give any such instructions unless an
Event of Default has occurred and is continuing or would occur after taking into
account any action by the respective Assignor with respect to any such bailee.
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES; INSTRUMENTS; CHATTEL
PAPER AND CERTAIN OTHER COLLATERAL
3.1. Additional Representations and Warranties. As of the time when
each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that each such Receivable, and all records, papers and
documents relating thereto (if any) are genuine and what they purport to be, and
that all papers and documents (if any) relating thereto (i) will, to the
knowledge of such Assignor, represent the genuine, legal, valid and binding
obligation of the account debtor evidencing indebtedness unpaid and owed by the
respective account debtor arising out of the performance of labor or services or
the sale or lease and delivery of the merchandise listed therein, or both, (ii)
will be the only original writings evidencing and embodying such obligation of
the account debtor named therein (other than copies created for general
accounting purposes), (iii) will, to the knowledge of such Assignor, evidence
true and valid obligations, enforceable in accordance with their respective
terms, and (iv) will be in compliance and will conform in all material respects
with all applicable federal, state and local laws and applicable laws of any
relevant foreign jurisdiction.
3.2. Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense accurate records of its Receivables, including, but not
limited to, originals of all documentation with respect thereto, records of all
payments received, all credits granted thereon, all merchandise returned and all
other dealings therewith, and such Assignor will make the same available on such
Assignor's premises to the Assignee for inspection, at such Assignor's own cost
and expense, at any and all reasonable times upon prior notice to such Assignor
and otherwise in accordance with the Credit Agreement. Upon the occurrence and
during the continuance of an Event of Default and at the request of the
Assignee, such Assignor shall, at its own cost and expense, deliver all tangible
evidence of its Receivables (including, without limitation, all documents
evidencing the Receivables) and such books and records to the Assignee or to its
representatives (copies of which evidence and books and records may be retained
by such Assignor). Upon the occurrence and during the continuance of an Event of
Default and if the Assignee so directs, such Assignor shall legend, in form and
manner satisfactory to the Assignee, the Receivables, as well as books, records
and documents (if any) of such Assignor evidencing or pertaining to such
Receivables with an appropriate reference to the
fact that such Receivables have been assigned to the Assignee and that the
Assignee has a security interest therein.
3.3. Direction to Account Debtors; Contracting Parties; etc. Upon the
occurrence and during the continuance of an Event of Default, if the Assignee so
directs any Assignor, such Assignor agrees (x) to cause all payments on account
of the Receivables to be made directly to the Collateral Account, (y) that the
Assignee may, at its option, directly notify the obligors with respect to any
Receivables to make payments with respect thereto as provided in the preceding
clause (x), and (z) that the Assignee may enforce collection of any such
Receivables and may adjust, settle or compromise the amount of payment thereof,
in the same manner and to the same extent as such Assignor. Without notice to or
assent by any Assignor, the Assignee may, upon the occurrence and during the
continuance of an Event of Default, apply any or all amounts then in, or
thereafter deposited in, the Collateral Account toward the payment of the
Obligations in the manner provided in Section 5.4 of this Agreement. The
reasonable costs and expenses of collection (including reasonable attorneys'
fees), whether incurred by an Assignor or the Assignee, shall be borne by the
relevant Assignor. The Assignee shall deliver a copy of each notice referred to
in the preceding clause (y) to the relevant Assignor, provided that (x) the
failure by the Assignee to so notify such Assignor shall not affect the
effectiveness of such notice or the other rights of the Assignee created by this
Section 3.3 and (y) no such notice shall be required if an Event of Default of
the type described in Section 8.05 of the Credit Agreement has occurred and is
continuing.
3.4. Modification of Terms; etc. Except in accordance with such
Assignor's ordinary course of business and consistent with reasonable business
judgment, no Assignor shall rescind or cancel any indebtedness evidenced by any
Receivable, or modify any term thereof or make any adjustment with respect
thereto, or extend or renew the same, or compromise or settle any material
dispute, claim, suit or legal proceeding relating thereto, or sell any
Receivable, or interest therein, without the prior written consent of the
Assignee. No Assignor will do anything to impair the rights of the Assignee in
the Receivables.
3.5. Collection. Each Assignor shall endeavor in accordance with
reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables, as and when due (including, without
limitation, amounts which are delinquent, such amounts to be collected in
accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Receivable, and apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Receivable. Except as otherwise directed by the Assignee after the
occurrence and during the continuation of an Event of Default, any Assignor may
allow in the ordinary course of business as adjustments to amounts owing under
its Receivables (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which such Assignor finds
appropriate in accordance with reasonable business judgment and (ii) a refund or
credit due as a result of returned or damaged merchandise or improperly
performed services or for other reasons which such Assignor finds appropriate in
accordance with reasonable business judgment. The reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) of
collection, whether incurred by an Assignor or the Assignee, shall be borne by
the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any Instrument
constituting Collateral (other than checks and other payment instruments
received and collected in the ordinary course of business), such Assignor will
within 10 Business Days notify the Assignee thereof, and upon request by the
Assignee will promptly deliver such Instrument to the Assignee appropriately
endorsed to the order of the Assignee as further security hereunder.
3.7. Assignors Remain Liable Under Receivables. Anything herein to the
contrary notwithstanding, the Assignors shall remain liable under each of the
Receivables to observe and perform all of the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to such Receivables. The Assignee shall not have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) by reason of or arising out of this Agreement or the receipt by the
Assignee of any payment relating to such Receivable pursuant hereto, nor shall
the Assignee be obligated in any manner to perform any of the obligations of any
Assignor under or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by them or as to the sufficiency of any
performance by any party under any Receivable (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.
3.8. Collateral Account; Deposit Accounts. (a) The Assignee may
establish for its own benefit an account for the purposes of this Agreement (the
"Collateral Account"). The Assignee shall be under the sole dominion and control
of the Assignee and the Assignee shall have the sole right to make withdrawals
from the Collateral Account and to exercise all rights with respect to the
Collateral from time to time therein. All Collateral to be held in the
Collateral Account pursuant hereto and the Credit Agreement shall be held in the
Collateral Account in accordance with the provisions hereof.
(b) For each deposit or similar account that any Assignor at any time
opens or maintains, such Assignor shall, at the Assignee's request, pursuant to
a control agreement in form and substance reasonably satisfactory to the
Assignee, either (a) cause the depositary bank to agree to comply at any time
with instructions from the Assignee to such depositary bank directing the
disposition of funds from time to time credited to such deposit account, without
further consent of the respective Assignor, or (b) arrange for the Assignee to
become the customer of the depositary bank with respect to the deposit account,
with the respective Assignor being permitted, only with the consent of the
Assignee, to exercise rights to withdraw funds from such deposit account. The
Assignee agrees with the Assignors that the Assignee shall not give any such
instructions or withhold any withdrawal rights from any Assignor, unless an
Event of Default has occurred and is continuing, or, after giving effect to any
withdrawal not otherwise permitted by the Secured Debt Agreements, would occur.
As of the date hereof, all deposit and similar accounts maintained by each
Assignor is set forth in Annex E hereto (the "Annex E
Accounts"). No Assignor shall open any new depositary or similar account unless
(i) it shall have given the Assignee at least 15 days prior written notice
thereof and (ii) it shall have taken all actions requested to be taken by the
Assignee with respect thereto as otherwise described above in this Section
3.8(b). Unless an Event of Default has occurred and is continuing (whereupon,
upon such Event of Default, no funds may be withdrawn by any Assignor or other
Person, subject to applicable laws, from any Annex E Accounts without the prior
written consent or instructions of the Lender), funds may be withdrawn from the
Annex E Accounts by the respective Assignor exclusively for the purpose of
making payments to current account debtors in the ordinary course of business
and for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of such Assignors' salaried employees.
ARTICLE IV
PROVISIONS CONCERNING ALL COLLATERAL
4.1. Protection of Assignee's Security. Except as otherwise permitted
by the Secured Debt Agreements, each Assignor will do nothing to impair the
rights of the Assignee in the Collateral. Each Assignor will at all times keep
its Inventory and Equipment insured in favor of the Assignee, at such Assignor's
own expense to the extent and in the manner provided in the Secured Debt
Agreements. Except to the extent otherwise permitted to be retained by such
Assignor or applied by such Assignor pursuant to the terms of the Secured Debt
Agreements, the Assignee shall, at the time any proceeds of such insurance are
distributed to the Assignee, apply such proceeds in accordance with Section 5.4
hereof. Each Assignor assumes all liability and responsibility in connection
with the Collateral acquired by it and the liability of such Assignor to pay the
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to such Assignor.
4.2. Warehouse Receipts Non-negotiable. To the extent practicable,
each Assignor agrees that if any warehouse receipt or receipt in the nature of a
warehouse receipt is issued with respect to any of its Inventory, such Assignor
shall request that such warehouse receipt or receipt in the nature thereof shall
not be "negotiable" (as such term is used in Section 7-104 of the Uniform
Commercial Code as in effect in any relevant jurisdiction or under other
relevant law).
4.3. Further Actions. Each Assignor will, at its own expense
and upon the reasonable request of the Assignee, make, execute, endorse,
acknowledge, file and/or deliver to the Assignee from time to time such lists,
descriptions and designations of its Collateral, warehouse receipts, receipts in
the nature of warehouse receipts, bills of lading, documents of title, vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Assignee deems reasonably appropriate or advisable to perfect, preserve or
protect its security interest in the Collateral.
4.4. Financing Statements. Each Assignor agrees to execute and deliver
to the Assignee such financing statements, in form reasonably acceptable to the
Assignee, as the Assignee may from time to time reasonably request or as are
reasonably necessary or desirable in the opinion of the Assignee to establish
and maintain a valid, enforceable, perfected security interest in the Collateral
as provided herein and the other rights and security contemplated hereby. Each
Assignor will pay any applicable filing fees, recordation taxes and related
expenses relating to its Collateral. Each Assignor hereby authorizes the
Assignee to file any such financing statements without the signature of such
Assignor where permitted by law (and such authorization includes describing the
Collateral as "all assets" of such Assignor).
ARTICLE V
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
5.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Assignee, in addition to any rights now or hereafter
existing under applicable law and under the other provisions of this Agreement,
shall have all rights as a secured creditor under any UCC, and such additional
rights and remedies to which a secured creditor is entitled under the laws in
effect in all relevant jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take possession
of the Collateral or any part thereof, from such Assignor or any other
Person who then has possession of any part thereof with or without notice
or process of law, and for that purpose may enter upon such Assignor's
premises where any of the Collateral is located and remove the same and use
in connection with such removal any and all services, supplies, aids and
other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Receivables)
constituting the Collateral to make any payment required by the terms of
such agreement, instrument or other obligation directly to the Assignee and
may exercise any and all remedies of such Assignor in respect of such
Collateral;
(iii) instruct all depositary banks which have entered into a control
agreement with the Assignee to transfer all monies, securities and
instruments held by such depositary bank to the Collateral Account;
(iv) withdraw all monies, securities and instruments in the Collateral
Account and in the Collateral Account for application to the Obligations in
accordance with Section 5.4 hereof;
(v) sell, assign or otherwise liquidate any or all of the Collateral
or any part thereof in accordance with Section 5.2 hereof, or direct the
relevant Assignor to sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof, and, in each case, take possession of the
proceeds of any such sale or liquidation;
(vi) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Assignee at any reasonable place or places designated by the Assignee, in
which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or places
so designated by the Assignee and there delivered to the Assignee;
(y) store and keep any Collateral so delivered to the Assignee at
such place or places pending further action by the Assignee as
provided in Section 5.2 hereof; and
(z) while the Collateral shall be so stored and kept, provide
such security and maintenance services as shall be reasonably
necessary to protect the same and to preserve and maintain it in good
condition;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Assignee shall be entitled to a decree
requiring specific performance by such Assignor of said obligation.
5.2. Remedies; Disposition of the Collateral. If any Event of Default
shall have occurred and be continuing, then any Collateral repossessed by the
Assignee under or pursuant to Section 5.1 hereof and any other Collateral
whether or not so repossessed by the Assignee, may be sold, assigned, leased or
otherwise disposed of under one or more contracts or as an entirety, and without
the necessity of gathering at the place of sale the property to be sold, and in
general in such manner, at such time or times, at such place or places and on
such terms as the Assignee may, in compliance with any mandatory requirements of
applicable law, determine to be commercially reasonable. Any of the Collateral
may be sold, leased or otherwise disposed of, in the condition in which the same
existed when taken by the Assignee or after any overhaul or repair at the
expense of the relevant Assignor which the Assignee shall determine to be
commercially reasonable. Any such disposition which shall be a private sale or
other private proceedings permitted by such requirements shall be made upon not
less than 10 days' prior written notice to the relevant Assignor specifying the
time at which such disposition is to be made and the intended sale price or
other consideration therefor, and shall be subject, for the 10 days after the
giving of such notice, to the right of the relevant Assignor or any nominee of
such Assignor to acquire the Collateral involved at a price or for such other
consideration at least equal to the intended sale price or other consideration
so specified. Any such disposition which shall be a public sale permitted by
such requirements shall be made upon not less than 10 days' prior written notice
to the relevant Assignor specifying the time and place of such sale and, in the
absence of applicable requirements of law, shall be by public auction (which
may, at the Assignee's option, be subject to reserve), after publication of
notice of such auction (where required by applicable law) not less than 10 days
prior thereto. The Assignee may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be made
at any time or place to which the sale may be so adjourned. To the extent
permitted by any such requirement of law, the Assignee may bid for and become
the purchaser of the Collateral or any item thereof, offered for sale in
accordance with this Section 5.2 without accountability to the relevant
Assignor. If, under applicable law, the Assignee shall be permitted to make
disposition of the Collateral within a period of time which does not permit the
giving of notice to the relevant Assignor as hereinabove specified, the Assignee
need give such Assignor only such notice of disposition as shall be reasonably
practicable in view of such applicable law. Each Assignor agrees to do or cause
to be done all such other acts and things as may be reasonably necessary to make
such sale or sales of all or any portion of the Collateral valid and binding and
in compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at such Assignor's expense.
5.3. Waiver of Claims. Except as otherwise provided in this Agreement,
EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE
AND JUDICIAL HEARING IN CONNECTION WITH THE LENDER'S TAKING POSSESSION OR THE
LENDER'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION,
ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and
each Assignor hereby further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Assignee's gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision);
(ii) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Assignee's rights
hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
5.4. Application of Proceeds. (a) All moneys collected by the Assignee
upon any sale or other disposition of the Collateral (and, to the extent any
other Security Document requires proceeds of collateral under such other
Security Document to be applied in accordance with the provisions of this
Agreement, all moneys collected by the Assignee under such other Security
Document upon any sale or other disposition of collateral under any such
Security Document), together with all other moneys received by the Assignee
hereunder and under each other Security Document, shall be applied as follows:
(i) first, to the payment of all amounts owing to th-e Assignee of the
type described in clause (iv) of the definition of "Obligations";
(ii) second, to the extent proceeds remain after the application
pursuant to preceding clause (i), an amount equal to the outstanding Senior
Obligations shall be paid to the Assignee; and
(iii) third, to the extent proceeds remain after the application
pursuant to preceding clauses (i) through (ii), inclusive, and following
the termination of this Agreement pursuant to Section 8.8(a) hereof, to the
relevant Assignor or to whomever may be lawfully entitled to receive such
surplus.
(b) This Agreement is made with full recourse to each Assignor
(including, without limitation, with full recourse to all assets of such
Assignor) and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Assignor contained herein, in the
other Secured Debt Agreements and otherwise in writing in connection herewith or
therewith. It is understood that the Assignors shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the Obligations.
5.5. Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Assignee shall be in addition to every other
right, power and remedy specifically given to the Assignee under this Agreement,
the other Secured Debt Agreements or now or hereafter existing at law, in equity
or by statute and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised from time to time or
simultaneously and as often and in such order as may be deemed expedient by the
Assignee. All such rights, powers and remedies shall be cumulative and the
exercise or the beginning of the exercise of one shall not be deemed a waiver of
the right to exercise any other or others. No delay or omission of the Assignee
in the exercise of any such right, power or remedy and no renewal or extension
of any of the Obligations shall impair any such right, power or remedy or shall
be construed to be a waiver of any Default or Event of Default or an
acquiescence therein. No notice to or demand on any Assignor in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Assignee to any
other or further action in any circumstances without notice or demand. In the
event that the Assignee shall bring any suit to enforce any of its rights
hereunder and shall be entitled to judgment, then in such suit the Assignee may
recover reasonable
expenses, including reasonable attorneys' fees, and the amounts thereof shall be
included in such judgment.
5.6. Discontinuance of Proceedings. In case the Assignee shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Assignee, then and in every such case the relevant Assignor,
the Assignee and each holder of any of the Obligations shall be restored to
their former positions and rights hereunder with respect to the Collateral
subject to the security interest created under this Agreement, and all rights,
remedies and powers of the Assignee shall continue as if no such proceeding had
been instituted.
ARTICLE VI
INDEMNITY
6.1. Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Assignee and its respective successors,
assigns, employees, affiliates and agents (hereinafter in this Section 6.1
referred to individually as "Indemnitee," and collectively as "Indemnitees")
harmless from any and all liabilities, obligations, damages, injuries,
penalties, claims, demands, actions, suits, judgments and any and all costs,
expenses or disbursements (including reasonable attorneys' fees and expenses)
(for the purposes of this Section 6.1 the foregoing are collectively called
"expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Agreement, any other Secured Debt Agreement or any other document executed in
connection herewith or therewith or in any other way connected with the
administration of the transactions contemplated hereby or thereby or the
enforcement of any of the terms of, or the preservation of any rights under any
thereof, or in any way relating to or arising out of the manufacture, ownership,
ordering, purchase, delivery, control, acceptance, lease, financing, possession,
operation, condition, sale, return or other disposition, or use of the
Collateral (including, without limitation, latent or other defects, whether or
not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 6.1(a) for losses, damages or liabilities to the extent
caused by the gross negligence or willful misconduct of such Indemnitee (as
determined by a court of competent jurisdiction in a final and non-appealable
decision). Each Assignor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action, suit or judgment, the relevant Assignor shall assume full
responsibility for the defense thereof. Each Indemnitee agrees to use its best
efforts to promptly notify the relevant Assignor of any such assertion of which
such Indemnitee has knowledge.
(b) Without limiting the application of Section 6.1(a) hereof, each
Assignor agrees, jointly and severally, to pay or reimburse the Assignee for any
and all reasonable fees,
costs and expenses of whatever kind or nature incurred in connection with the
creation, preservation or protection of the Assignee's Liens on, and security
interest in, the Collateral, including, without limitation, all fees and taxes
in connection with the recording or filing of instruments and documents in
public offices, payment or discharge of any taxes or Liens upon or in respect of
the Collateral, premiums for insurance with respect to the Collateral and all
other fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Assignee's interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any actions,
suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 6.1(a) or (b) hereof,
each Assignor agrees, jointly and severally, to pay, indemnify and hold each
Indemnitee harmless from and against any loss, costs, damages and expenses which
such Indemnitee may suffer, expend or incur in consequence of or growing out of
any misrepresentation by any Assignor in this Agreement, any other Secured Debt
Agreement or in any writing contemplated by or made or delivered pursuant to or
in connection with this Agreement or any other Secured Debt Agreement.
(d) If and to the extent that the obligations of any Assignor under
this Section 6.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
6.2. Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all of the
other Obligations and notwithstanding the full payment of all the Notes issued
under the Credit Agreement and the payment of all other Obligations and
notwithstanding the discharge thereof.
ARTICLE VII
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning provided in the first paragraph of
this Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of this
Agreement.
"Collateral Account" shall have the meaning provided in Section 3.8(a)
hereof.
"Credit Agreement" shall have the meaning provided in the recitals of
this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article VII.
"Default" shall mean any event which with notice or lapse of time, or
both, would constitute an Event of Default.
"Equipment" shall mean any "equipment," as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, fixtures and
vehicles now or hereafter owned by any Assignor and any and all additions,
substitutions and replacements of any of the foregoing and all accessions
thereto, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement and shall in any event include, without
limitation, any payment default on any of the Obligations after the expiration
of any applicable grace period.
"Indemnitee" shall have the meaning provided in Section 6.1(a) of this
Agreement.
"Instrument" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof and all accessions thereto,
wherever located, together with all goods, supplies, incidentals, packaging
materials, labels, materials and any other items used or usable in
manufacturing, processing, packaging or shipping same, in all stages of
production from raw materials through work in process to finished goods, and all
products and proceeds of whatever sort and wherever located any portion thereof
which may be returned, rejected, reclaimed or repossessed by the Assignee from
any Assignor's customers, and shall specifically include all "inventory" as such
term in defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York, now or hereafter owned by any Assignor.
"Assignee" shall have the meaning provided in the recitals of this
Agreement.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations, liabilities and indebtedness (including, without limitation,
principal, premium, interest, fees, costs and indemnities
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of any Assignor at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such proceeding)) of each Assignor to the Assignee, whether
now existing or hereafter incurred under, arising out of, or in connection with,
the Credit Agreement and the other Credit Documents to which such Assignor is a
party (including, in the case of each Assignor that is a Guarantor, all such
obligations, liabilities and indebtedness of such Assignor under the Guaranty to
which it is a party) and the due performance and compliance by such Assignor
with all of the terms, conditions and agreements contained in the Credit
Agreement and in such other Credit Documents (all such obligations, liabilities
and indebtedness under this clause (i), being herein collectively called the
"Credit Document Obligations"); (ii) any and all sums advanced by the Assignee
in order to preserve the Collateral or preserve its security interest in the
Collateral; (iii) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of such Assignor
referred to in clauses (i) or (ii) above, after an Event of Default shall have
occurred and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by the Assignee of its rights hereunder,
together with reasonable attorneys' fees and court costs; and (iv) all amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement under Section 6.1 of this Agreement; it being acknowledged and
agreed that the "Obligations" shall include extensions of credit of the types
described above, whether outstanding on the date of this Agreement or extended
from time to time after the date of this Agreement.
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Assignee or any Assignor from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to any Assignor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any person acting under color of
governmental authority) and (iii) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to health-care
insurance receivables and to payment for goods sold or leased or services
performed by such Assignor, whether now in existence or arising from time to
time hereafter, including, without limitation, rights evidenced by an account,
note contract, security agreement, chattel paper, or other evidence of
indebtedness or security, together with (a) all security pledged, assigned,
hypothecated or granted to or held by such Assignor to secure the foregoing, (b)
all of any Assignor's right, title and interest in and to any goods, the sale of
which gave rise thereto, (c) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing, (d) all powers of attorney for the execution of
any evidence of indebtedness or security or other writing in connection
therewith, (e) all books, records, ledger cards, and
invoices relating thereto, (f) all instruments in connection therewith and
amendments thereto, notices to other creditors or secured parties, and
certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto and (h) all other writings
related in any way to the foregoing.
"Secured Debt Agreements" shall mean and include this Agreement and
the other Credit Documents.
"Senior Obligations" shall mean in the case of the Credit Document
Obligations, all principal of, premium (if any), and interest on, the Loan under
the Credit Agreement, and similar obligations and liabilities.
"Termination Date" shall have the meaning provided in Section 8.8(a)
of this Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction.
ARTICLE VIII
MISCELLANEOUS
8.1. Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be sent or delivered by mail, telegraph, telex, telecopy, cable or
courier service and all such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by courier, be effective
when deposited in the mails, delivered to the telegraph company, cable company
or overnight courier, as the case may be, or sent by telex or telecopier, except
that notices and communications to the Assignee or any Assignor shall not be
effective until received by the Assignee or such Assignor, as the case may be.
All notices and other communications shall be in writing and addressed as
follows:
(a) if to any Assignor, at its address set forth opposite its
signature below;
(b) if to the Assignee, at:
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
Telephone No.: (000) 000-0000
Telecopier No.:(000) 000-0000
or at such other address or addressed to such other individual as shall have
been furnished in writing by any Person described above to the party required to
give notice hereunder.
8.2. Waiver; Amendment. None of the terms and conditions of this
Agreement or any other Security Document may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by each Assignor
directly affected thereby and the Assignee.
8.3. Obligations Absolute. The obligations of each Assignor hereunder
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Secured Debt
Agreement; or (c) any amendment to or modification of any Secured Debt Agreement
or any security for any of the Obligations; whether or not such Assignor shall
have notice or knowledge of any of the foregoing.
8.4. Successors and Assigns. This Agreement shall be binding upon each
Assignor and its successors and assigns (although no Assignor may assign its
rights and obligations hereunder except in accordance with the provisions of the
Secured Debt Agreements) and shall inure to the benefit of the Assignee and its
respective successors and assigns, although so long as any Senior Obligations
remain outstanding or any Commitments with respect thereto remain in effect. All
agreements, statements, representations and warranties made by each Assignor
herein or in any certificate or other instrument delivered by such Assignor or
on its behalf under this Agreement shall be considered to have been relied upon
by the Assignee and shall survive the execution and delivery of this Agreement
and the other Secured Debt Agreements regardless of any investigation made by
the Assignee or on its behalf.
8.5. Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
8.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE OF LAW PROVISIONS.
8.7. Assignor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Assignee shall not have any obligations or liabilities
with respect to any Collateral by reason of or arising out of this Agreement,
nor shall the Assignee be required or obligated in any manner to perform or
fulfill any of the obligations of any Assignor under or with respect to any
Collateral.
8.8. Termination; Release. (a) After the Termination Date, this
Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 6.1 hereof shall survive such
termination) and the Assignee, at the request and expense of the respective
Assignor, will promptly execute and deliver to such Assignor a proper instrument
or instruments (including Uniform Commercial Code termination statements on form
UCC-3)
acknowledging the satisfaction and termination of this Agreement, and will duly
assign, transfer and deliver to such Assignor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Assignee and as has not theretofore been sold or otherwise applied or
released pursuant to this Agreement. As used in this Agreement, "Termination
Date" shall mean the date upon which the Commitment under the Credit Agreement
has been terminated, no Note under the Credit Agreement is outstanding and the
Loan thereunder has been repaid in full, and all other Obligations have been
paid in full.
(b) In the event that any part of the Collateral is sold in connection
with a sale permitted by the Secured Debt Agreements (other than a sale to any
Assignor) or is otherwise released with the consent of the Assignee and the
proceeds of such sale or sales or from such release are applied in accordance
with the provisions of the Credit Agreement, to the extent required to be so
applied, such Collateral will be sold free and clear of the Liens created by
this Agreement and the Assignee, at the request and expense of the relevant
Assignor, will duly and promptly assign, transfer and deliver to such Assignor
(without recourse and without any representation or warranty) such of the
Collateral as is then being (or has been) so sold or released and as may be in
the possession of the Assignee and has not theretofore been released pursuant to
this Agreement.
(c) At any time that an Assignor desires that the Assignee take any
action to acknowledge or give effect to any release of Collateral pursuant to
the foregoing Section 8.8(a) or (b), such Assignor shall deliver to the Assignee
a certificate signed by a senior officer of such Assignor stating that the
release of the respective Collateral is permitted pursuant to such Section
8.8(a) or (b).
8.9. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with each Assignor and the
Assignee.
8.10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.11. Additional Assignors. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall become an
Assignor hereunder by (x) executing a counterpart hereof and delivering same to
the Assignee, (y) delivering supplements to Annexes A through E hereto as are
necessary to cause such Annexes to be complete and accurate with respect to such
additional Assignor on such date and (z) taking all actions as specified in this
Agreement as would have been taken by such Assignor had it been an original
party to this Agreement, in each case with all documents required above to be
delivered to the Assignee and
with all documents and actions required above to be taken to the reasonable
satisfaction of the Assignee.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
Attn: Xxxxxx X. Xxxxxxx, Xx. UNIROYAL OPTOELECTRONICS LLC,
Telephone No.: (000) 000-0000 as an Assignor
Telecopier No.: (000) 000-0000
By:
-----------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President and
Treasurer
Accepted and Agreed to:
EMCORE CORPORATION,
as Assignee and Assignee
By:
-------------------------------
Name:
Title:
SCHEDULE 1
LIST OF EQUIPMENT
AMOUNT
(000's)
EQUIPMENT (AT UOE)
MOCVD REACTOR - -EMCORE (GAN #3) $ 995
(SN No. 5548)
MOCVD REACTOR - -EMCORE (GAN #5) $ 541
(SN No. 5803)
MOCVD REACTOR - - EMCORE (GAN #6) $ 681
(SN No. 5859)
MOCVD REACTOR - - EMCORE (GAN #7) $ 681
(SN No. 5858) -----
NOTE: NONE OF THE COLLATERAL IS PERMANENTLY AFFIXED TO THE REAL PROPERTY.
ANNEX A
to
SECURITY AGREEMENT
SCHEDULE OF CHIEF EXECUTIVE OFFICES
AND OTHER RECORD LOCATIONS
Assignor Chief Executive Office
Uniroyal Optoelectronics, LLC 0000 Xxxxxxxx Xxxxx
Xxxxx, XX 00000
ANNEX B
to
SECURITY AGREEMENT
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
Assignor Location
Uniroyal Optoelectronics, LLC 0000 Xxxxxxxx Xxxxx
Xxxxx, XX 00000
ANNEX C
to
SECURITY AGREEMENT
SCHEDULE OF LEGAL, TRADE AND FICTITIOUS NAMES
AND ORGANIZATIONAL IDENTIFICATION NUMBERS
I. Legal Name/Organizational Identification Number
Uniroyal Optoelectronics, LLC
II. Trade and Fictitious Names
None.
Annex D
to
Security Agreement
SCHEDULE OF JURISDICTIONS AND TYPES OF ORGANIZATIONS
Assignor Jurisdiction Type of Organization
------- ------------ --------------------
Uniroyal Optoelectonics, LLC Delaware LLC
Annex E
to
Security Agreement
DEPOSITARY ACCOUNTS
Assignor Account No. Type of Account Institution
-------- ----------- --------------- -----------
Uniroyal Optoelectronics, LLC DDA2090002593219 Deposit Account First Union National Bank
TABLE OF CONTENTS
Page
ARTICLE I
SECURITY INTERESTS............................................................................1
1.1. Grant of Security Interests........................................................................1
1.2. Power of Attorney..................................................................................2
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.............................................2
2.1. Necessary Filings..................................................................................2
2.2. No Liens...........................................................................................3
2.3. Other Financing Statements.........................................................................3
2.4. Chief Executive Office, Record Locations...........................................................3
2.5. Location of Inventory and Equipment................................................................4
2.6. Legal Names; Organizational Identification Number; Trade Names; Change of Name; etc................4
2.7. Jurisdiction and Type of Organization..............................................................4
2.8. Collateral in the Possession of a Bailee...........................................................5
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS; CHATTEL
PAPER AND CERTAIN OTHER COLLATERAL............................................................5
3.1. Additional Representations and Warranties..........................................................5
3.2. Maintenance of Records.............................................................................5
3.3. Direction to Account Debtors; Contracting Parties; etc.............................................6
3.4. Modification of Terms; etc.........................................................................6
3.5. Collection.........................................................................................6
3.6. Instruments........................................................................................7
3.7. Assignors Remain Liable Under Receivables..........................................................7
3.8. Collateral Account; Deposit Accounts...............................................................7
ARTICLE IV
PROVISIONS CONCERNING ALL COLLATERAL..........................................................8
(i)
4.1. Protection of Assignee's Security..................................................................8
4.2. Warehouse Receipts Non-negotiable..................................................................8
4.3. Further Actions....................................................................................9
4.4. Financing Statements...............................................................................9
ARTICLE V
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT...............................................9
5.1. Remedies; Obtaining the Collateral Upon Default....................................................9
5.2. Remedies; Disposition of the Collateral...........................................................11
5.3. Waiver of Claims..................................................................................11
5.4. Application of Proceeds...........................................................................12
5.5. Remedies Cumulative...............................................................................13
5.6. Discontinuance of Proceedings.....................................................................13
ARTICLE VI
INDEMNITY....................................................................................13
6.1. Indemnity.........................................................................................13
6.2. Indemnity Obligations Secured by Collateral; Survival.............................................15
ARTICLE VII
DEFINITIONS..................................................................................15
ARTICLE VIII
MISCELLANEOUS................................................................................18
8.1. Notices...........................................................................................18
8.2. Waiver; Amendment.................................................................................19
8.3. Obligations Absolute..............................................................................19
8.4. Successors and Assigns............................................................................19
8.5. Headings Descriptive..............................................................................19
8.6. Governing Law.....................................................................................19
8.7. Assignor's Duties.................................................................................19
8.8. Termination; Release..............................................................................19
8.9. Counterparts......................................................................................20
8.10. Severability.....................................................................................20
8.11. Additional Assignors.............................................................................20
(ii)
ANNEX A Schedule of Chief Executive Offices and Other Record Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Schedule of Legal Names, Organizational Identification Numbers and
Trade and Fictitious Names
ANNEX D Schedule of Jurisdictions and Types of Organizations
ANNEX E Depositary Accounts
EXHIBIT F
SUBSIDIARIES GUARANTY
SUBSIDIARIES GUARANTY, dated as of August __, 2001 (as amended,
modified or supplemented from time to time, this "Guaranty"), made by each of
the undersigned guarantors (each a "Guarantor," and together with any other
entity that becomes a guarantor hereunder pursuant to Section 26 hereof, the
"Guarantors"). Except as otherwise defined herein, capitalized terms used herein
and defined in the Credit Agreement (as defined below) shall be used herein as
therein defined.
W I T N E S S E T H :
WHEREAS, Uniroyal Technology Corporation (the "Borrower"), and EMCORE
Corporation, as Lender (the "Lender"), have entered into a Credit Agreement,
dated as of August __, 2001 (as amended, modified, or supplemented from time to
time, the "Credit Agreement"), providing for the making of a Loan to the
Borrower as contemplated therein (the Lender is herein called the "Secured
Creditor");
WHEREAS, each Guarantor is a direct or indirect Subsidiary of the
Borrower;
WHEREAS, it is a condition to the making of the Loan to the Borrower
under the Credit Agreement that each Guarantor shall have executed and delivered
this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of the
Loan to the Borrower under the Credit Agreement and, accordingly, desires to
execute this Guaranty in order to satisfy the condition described in the
preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Secured Creditor and hereby covenants and agrees with each
Secured Creditor as follows:
1. Each Guarantor, jointly and severally, irrevocably, absolutely and
unconditionally guarantees: to the Secured Creditor the full and prompt payment
when due (whether at the stated maturity, by acceleration or otherwise) of (x)
the principal of, premium, if any, and interest on the Notes issued by, and the
Loans made to, the Borrower under the Credit Agreement, and (y) all other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due), liabilities and
indebtedness owing by the Borrower to the Secured Creditor under the Credit
Agreement and each other Credit Document to which the Borrower is a party
(including, without limitation, indemnities, and interest thereon), whether now
existing or hereafter incurred under, arising out of or in connection with the
Credit Agreement and any such other Credit Document and the due performance and
compliance by the Borrower with all of the terms, conditions and agreements
contained in all such Credit Documents (all such principal, premium, interest,
liabilities, indebtedness and obligations being herein collectively called the
"Credit Document Obligations" or the "Guaranteed Obligations"). Each Guarantor
understands, agrees and confirms that the Secured Creditor may enforce this
Guaranty up to the full amount of the Guaranteed Obligations against such
Guarantor without proceeding against any other Guarantor, the Borrower, against
any security for the Guaranteed Obligations, or under any other guaranty
covering all or a portion of the Guaranteed Obligations.
2. Additionally, each Guarantor, jointly and severally,
unconditionally, absolutely and irrevocably, guarantees the payment of any and
all Guaranteed Obligations whether or not due or payable by the Borrower upon
the occurrence in respect of the Borrower of any of the events specified in
Section 8.05 of the
Exhibit F
Page 2
Credit Agreement, and unconditionally and irrevocably, jointly and severally,
promises to pay such Guaranteed Obligations to the Secured Creditor, or order,
on demand, in legal tender of the United States. This Guaranty shall constitute
a guaranty of payment, and not of collection.
3. The liability of each Guarantor hereunder is primary, absolute and
unconditional and is exclusive and independent of any security for or other
guaranty of the indebtedness of the Borrower whether executed by such Guarantor,
any other Guarantor, any other guarantor or by any other party, and the
liability of each Guarantor hereunder shall not be affected or impaired by any
circumstance or occurrence whatsoever (other than the indefeasible payment in
full in cash of all of the Guaranteed Obligations), including, without
limitation: (a) any direction as to application of payment by the Borrower or by
any other party, (b) any other continuing or other guaranty, undertaking or
maximum liability of a guarantor or of any other party as to the Guaranteed
Obligations, (c) any payment on or in reduction of any such other guaranty or
undertaking, (d) any dissolution, termination or increase, decrease or change in
personnel by the Borrower, (e) any payment made to any Secured Creditor on the
indebtedness which any Secured Creditor repays the Borrower pursuant to court
order in any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and each Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding, (f)
any action or inaction by the Secured Creditor as contemplated in Section 6
hereof or (g) any invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations or of any security therefor.
4. The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor or the Borrower, and a
separate action or actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other Guarantor, any other
guarantor or the Borrower and whether or not any other Guarantor, any other
guarantor or the Borrower be joined in any such action or actions. Each
Guarantor waives, to the fullest extent permitted by law, the benefits of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives (to the fullest extent permitted by
applicable laws) notice of acceptance of this Guaranty and notice of any
liability to which it may apply, and waives promptness, diligence, presentment,
demand of payment, protest, notice of dishonor or nonpayment of any such
liabilities, suit or taking of other action by the Lender or the Secured
Creditor against, and any other notice to, any party liable thereon (including
such Guarantor, any other Guarantor, any other guarantor or the Borrower).
6. The Secured Creditor (except as shall be required by applicable
statute and cannot be waived) may at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change,
increase or extend the time of payment of, renew or alter, any of the Guaranteed
Obligations (including any increase or decrease in the rate of interest thereon
or the principal amount thereof), any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended, renewed or
altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, impair, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset there
against;
Exhibit F
Page 3
(c) exercise or refrain from exercising any rights against the
Borrower, any other Credit Party, any Subsidiary thereof or otherwise act or
refrain from acting;
(d) release or substitute any one or more endorsers, Guarantors, other
guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the Borrower to creditors of the Borrower other than the Secured
Creditor;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Secured Creditor regardless of
what liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default
under, the Credit Documents or any of the instruments or agreements referred to
therein, or otherwise amend, modify or supplement the Credit Documents or any of
such other instruments or agreements;
(h) act or fail to act in any manner referred to in this Guaranty which
may deprive such Guarantor of its right to subrogation against the Borrower to
recover full indemnity for any payments made pursuant to this Guaranty; and/or
(i) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of such
Guarantor from its liabilities under this Guaranty.
7. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Secured Creditor in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein expressly specified are cumulative and not exclusive of any
rights or remedies which any Secured Creditor would otherwise have. No notice to
or demand on any Guarantor in any case shall entitle such Guarantor to any other
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Secured Creditor to any other or further action in
any circumstances without notice or demand. It is not necessary for any Secured
Creditor to inquire into the capacity or powers of the Borrower or the officers,
directors, partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
8. Any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Secured Creditor, and such indebtedness of the Borrower to any Guarantor, if the
Collateral Agent, after the occurrence and during the continuance of an Event of
Default, so requests, shall be collected, enforced and received by such
Guarantor as trustee for the Secured Creditor and be paid over to the Secured
Creditor on account of the indebtedness of the Borrower to the Secured Creditor,
but without affecting or impairing in any manner the liability of such Guarantor
under the other provisions of this Guaranty. Without limiting the generality of
the foregoing, each Guarantor hereby agrees with the Secured Creditor that it
will not exercise any right of subrogation which it may at any time otherwise
have as a result of this Guaranty (whether contractual, under Section 509 of the
Bankruptcy Code or otherwise) until all Guaranteed Obligations have been
irrevocably paid in full in cash.
9. (a) Each Guarantor waives any right (except as shall be required by
applicable law and cannot be waived) to require the Secured Creditor to: (i)
proceed against the Borrower, any other Guarantor,
Exhibit F
Page 4
any other guarantor of the Guaranteed Obligations or any other party; (ii)
proceed against or exhaust any security held from the Borrower, any other
Guarantor, any other guarantor of the Guaranteed Obligations or any other party;
or (iii) pursue any other remedy in the Secured Creditor's power whatsoever.
Each Guarantor waives any defense based on or arising out of any defense of the
Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations
or any other party other than payment in full of the Guaranteed Obligations,
including, without limitation, any defense based on or arising out of the
disability of the Borrower, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower other than payment in full of the
Guaranteed Obligations. The Secured Creditor may, at its election, foreclose on
any security held by the Collateral Agent by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable,
or exercise any other right or remedy the Secured Creditor may have against the
Borrower or any other party, or any security, without affecting or impairing in
any way the liability of any Guarantor hereunder except to the extent the
Guaranteed Obligations have been paid in full in cash. Each Guarantor waives any
defense arising out of any such election by the Secured Creditor, even though
such election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor against the Borrower or
any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Secured Creditor shall have no
duty to advise any Guarantor of information known to them regarding such
circumstances or risks.
10. The Secured Creditor agrees that this Guaranty may not be enforced
against any director, officer, employee, partner, member or stockholder of any
Guarantor (except to the extent such partner, member or stockholder is also a
Guarantor hereunder).
11. In order to induce the Lender to make the Loan to the Borrower
pursuant to the Credit Agreement, each Guarantor represents, warrants and
covenants that:
(a) Such Guarantor (i) is a duly organized and validly existing
corporation, partnership or limited liability company, as the case may be, in
good standing under the laws of the jurisdiction of its organization, (ii) has
the corporate, partnership or limited liability company power and authority, as
the case may be, to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (iii) is duly qualified
and is authorized to do business and is in good standing in each jurisdiction
where the conduct of its business requires such qualification except for
failures to be so qualified which, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(b) Such Guarantor has the corporate, partnership or limited liability
company power and authority, as the case may be, to execute, deliver and perform
the terms and provisions of this Guaranty and each other Credit Document to
which it is a party and has taken all necessary corporate, partnership or
limited liability company action, as the case may be, to authorize the
execution, delivery and performance by it of this Guaranty and each such other
Credit Document. Such Guarantor has duly executed and delivered this Guaranty
and each other Credit Document to which it is a party, and this Guaranty and
each such other Credit Document constitutes the legal, valid and binding
obligation of such Guarantor enforceable in accordance with its terms, except to
the extent that the enforceability hereof or thereof may be limited by
applicable bankruptcy,
Exhibit F
Page 5
insolvency, reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law).
(c) Neither the execution, delivery or performance by such Guarantor of
this Guaranty or any other Credit Document to which it is a party, nor
compliance by it with the terms and provisions hereof and thereof, will (i)
contravene any provision of any applicable law, statute, rule or regulation or
any applicable order, writ, injunction or decree of any court or governmental
instrumentality, (ii) conflict with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien (except pursuant to the Security Documents) upon any of the property or
assets of such Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, credit agreement, or any
other material agreement, contract or instrument to which such Guarantor or any
of its Subsidiaries is a party or by which it or any of its property or assets
is bound or to which it may be subject or (iii) violate any provision of the
certificate of incorporation or by-laws (or equivalent organizational documents)
of such Guarantor or any of its Subsidiaries.
(d) No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with (except as have been obtained or
made), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required for, (i) the
execution, delivery and performance of this Guaranty by such Guarantor or any
other Credit Document to which such Guarantor is a party or (ii) the legality,
validity, binding effect or enforceability of this Guaranty or any other Credit
Document to which such Guarantor is a party.
(e) There are no actions, suits or proceedings pending or, to such
Guarantor's knowledge, threatened (i) with respect to this Guaranty or any other
Credit Document to which such Guarantor is a party or (ii) with respect to such
Guarantor or any of its Subsidiaries that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
12. Each Guarantor covenants and agrees that on and after the Closing
Date and until such time as no Note remains outstanding and all Guaranteed
Obligations (other than indemnity obligations which are not then due and
payable) have been paid in full, such Guarantor will comply, and will cause each
of its Subsidiaries to comply, with all of the applicable provisions, covenants
and agreements contained in Sections 6 and 7 of the Credit Agreement, and will
take, or will refrain from taking, as the case may be, all actions that are
necessary to be taken or not taken so that it is not in violation of any
provision, covenant or agreement contained in Section 6 or 7 of the Credit
Agreement, and so that no Default or Event of Default, is caused by the actions
of such Guarantor or any of its Subsidiaries.
13. The Guarantors hereby jointly and severally agree to pay all
reasonable out-of-pocket costs and expenses of the Secured Creditor in
connection with the enforcement of this Guaranty in connection with any
amendment, waiver or consent relating hereto (including in each case, without
limitation, the reasonable fees and disbursements of counsel employed by the
Secured Creditor).
14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Secured Creditor
and its successors and assigns.
15. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of each
Guarantor directly affected thereby and with the written consent of the Secured
Creditor at all times prior to the time on which all Credit Document Obligations
have been paid in full.
Exhibit F
Page 6
16. Each Guarantor acknowledges that an executed (or conformed) copy of
each of the Credit Documents has been made available to a senior officer of such
Guarantor and such officer is familiar with the contents thereof.
17. In addition to any rights now or hereafter granted under applicable
law (including, without limitation, Section 151 of the New York Debtor and
Secured Creditor Law) and not by way of limitation of any such rights, upon the
occurrence and during the continuance of an Event of Default (such term to mean
and include any "Event of Default" as defined in the Credit Agreement), the
Secured Creditor is hereby authorized, at any time or from time to time, without
notice to any Guarantor or to any other Person, any such notice being expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Secured
Creditor to or for the credit or the account of such Guarantor, against and on
account of the obligations and liabilities of such Guarantor to such Secured
Creditor under this Guaranty, irrespective of whether or not such Secured
Creditor shall have made any demand hereunder and although said obligations,
liabilities, deposits or claims, or any of them, shall be contingent or
unmatured.
18. All notices, requests, demands or other communications pursuant
hereto shall be sent or delivered by mail, telegraph, telex, telecopy, cable or
overnight courier service and all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier and when mailed shall be effective three Business Days
following deposit in the mail with proper postage, except that notices and
communications to the Secured Creditor or any Guarantor shall not be effective
until received by the Secured Creditor or such Guarantor, as the case may be.
All notices and other communications shall be in writing and addressed to such
party at (i) in the case of the Lender, as provided in the Credit Agreement, and
(ii) in the case of any Guarantor, as provided in the Security Agreement; or in
any case at such other address as any of the Persons listed above may hereafter
notify the others in writing.
19. If claim is ever made upon any Secured Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower) then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
20. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Guaranty or any other Credit Document to which any
Guarantor is a party 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 in each case
located in the City of New York, and, by execution and delivery of this
Guaranty, each Guarantor hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Guarantor hereby further irrevocably waives any claim that any such
court lacks personal jurisdiction over such Guarantor, and agrees not to plead
or claim in any legal action or proceeding with respect to this Guaranty or any
other Credit Document to which such Guarantor is a party brought in any of the
aforesaid courts that any such court lacks personal jurisdiction over such
Guarantor. Each Guarantor further irrevocably consents to the service of process
out of any of the
Exhibit F
Page 7
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such Guarantor at
its address set forth opposite its signature below, such service to become
effective 30 days after such mailing. Each Guarantor hereby irrevocably waives
any objection to such service of process and further irrevocably waives and
agrees not to plead or claim in any action or proceeding commenced hereunder or
under any other Credit Document to which such Guarantor is a party that such
service of process was in any way invalid or ineffective. Nothing herein shall
affect the right of any of the Secured Creditors to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives (to the fullest extent
permitted by applicable law) any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Guaranty or any other Credit Document to which
such Guarantor is a party brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) EACH GUARANTOR AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE OF THE
BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY, THE OTHER CREDIT DOCUMENTS TO WHICH SUCH GUARANTOR IS A PARTY OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
21. In the event that all of the capital stock of one or more
Guarantors is sold or otherwise disposed of or liquidated in compliance with the
requirements of Section 7.02 of the Credit Agreement and the applicable
provisions of the other Secured Debt Agreements (as defined in the Security
Agreement) (or such sale or other disposition has been approved in writing by
the Lender and the proceeds of such sale, disposition or liquidation are applied
in accordance with the provisions of the Credit Agreement, to the extent
applicable, such Guarantor shall upon consummation of such sale or other
disposition (except to the extent that such sale or disposition is to the
Borrower or another Subsidiary thereof) be released from this Guaranty
automatically and without further action and this Guaranty shall, as to each
such Guarantor or Guarantors, terminate, and have no further force or effect (it
being understood and agreed that the sale of one or more Persons that own,
directly or indirectly, all of the capital stock of any Guarantor shall be
deemed to be a sale of such Guarantor for the purposes of this Section 21).
22. At any time a payment in respect of the Guaranteed Obligations is
made under this Guaranty, the right of contribution of each Guarantor against
each other Guarantor shall be determined as provided in the immediately
following sentence, with the right of contribution of each Guarantor to be
revised and restated as of each date on which a payment (a "Relevant Payment")
is made on the Guaranteed Obligations under this Guaranty. At any time that a
Relevant Payment is made by a Guarantor that results in the aggregate payments
made by such Guarantor in respect of the Guaranteed Obligations to and including
the date of the Relevant Payment exceeding such Guarantor's Contribution
Percentage (as defined below) of the aggregate payments made by all Guarantors
in respect of the Guaranteed Obligations to and including the date of the
Relevant Payment (such excess, the "Aggregate Excess Amount"), each such
Guarantor shall have a right of contribution against each other Guarantor who
has made no payments or payments in respect of the Guaranteed Obligations to and
including the date of the Relevant Payment in an aggregate amount less than such
other Guarantor's Contribution Percentage of the aggregate payments made to and
including the date of the Relevant Payment by all Guarantors in respect of the
Guaranteed Obligations (the aggregate amount of such deficit, the "Aggregate
Deficit Amount") in an amount equal to (x) a fraction the numerator of which is
the Aggregate Excess Amount of such Guarantor and the denominator of which is
the Aggregate Excess Amount of all Guarantors multiplied by (y) the Aggregate
Deficit Amount of such other Guarantor. A Guarantor's right of contribution
pursuant to the preceding sentences shall arise at the time of each computation,
subject to
Exhibit F
Page 8
adjustment to the time of each computation; provided, that no Guarantor may take
any action to enforce such right until the Guaranteed Obligations (other than
indemnity obligations which are not then due and payable) have been irrevocably
paid in full in cash, it being expressly recognized and agreed by all parties
hereto that any Guarantor's right of contribution arising pursuant to this
Section 22 against any other Guarantor shall be expressly junior and subordinate
to such other Guarantor's obligations and liabilities in respect of the
Guaranteed Obligations and any other obligations owing under this Guaranty. As
used in this Section 22: (i) each Guarantor's "Contribution Percentage" shall
mean the percentage obtained by dividing (x) the Adjusted Net Worth (as defined
below) of such Guarantor by (y) the aggregate Adjusted Net Worth of all
Guarantors; (ii) the "Adjusted Net Worth" of each Guarantor shall mean the
greater of (x) the Net Worth (as defined below) of such Guarantor and (y) zero;
and (iii) the "Net Worth" of each Guarantor shall mean the amount by which the
fair salable value of such Guarantor's assets on the date of any Relevant
Payment exceeds its existing debts and other liabilities (including contingent
liabilities, but without giving effect to any Guaranteed Obligations arising
under this Guaranty) on such date. All parties hereto recognize and agree that,
except for any right of contribution arising pursuant to this Section 22, each
Guarantor who makes any payment in respect of the Guaranteed Obligations shall
have no right of contribution or subrogation against any other Guarantor in
respect of such payment until all of the Guaranteed Obligations (other than
indemnity obligations which are not then due and payable) have been irrevocably
paid in full in cash. Each of the Guarantors recognizes and acknowledges that
the rights to contribution arising hereunder shall constitute an asset in favor
of the party entitled to such contribution. In this connection, each Guarantor
has the right to waive its contribution right against any Guarantor to the
extent that after giving effect to such waiver such Guarantor would remain
solvent, in the determination of the Required Lenders.
23. Each Guarantor and the Secured Creditor (by its acceptance of the
benefits of this Guaranty) hereby confirms that it is its intention that this
Guaranty not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Code, the Uniform Fraudulent Conveyance Act of any similar Federal or
state law. To effectuate the foregoing intention, each Guarantor and the Secured
Creditor (by its acceptance of the benefits of this Guaranty) hereby irrevocably
agrees that the Guaranteed Obligations guaranteed by such Guarantor shall be
limited to such amount as will, after giving effect to such maximum amount and
all other (contingent or otherwise) liabilities of such Guarantor that are
relevant under such laws and after giving effect to any rights to contribution
pursuant to any agreement providing for an equitable contribution among such
Guarantor and other Guarantors, result in the Guaranteed Obligations of such
Guarantor in respect of such maximum amount not constituting a fraudulent
transfer or conveyance.
24. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Guarantors and the Secured Creditor.
25. All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense and on the same basis as payments are made
by the Borrower under Sections 3.03 and 3.04 of the Credit Agreement.
26. It is understood and agreed that any Subsidiary of the Borrower
that is required to execute a counterpart of this Guaranty after the date hereof
pursuant to the Credit Agreement shall become a Guarantor hereunder by executing
a counterpart hereof and delivering the same to the Secured Creditor.
* * *
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
Uniroyal Compound Semiconductors, Inc.,
as a Guarantor
By
-------------------------------------
Title:
Uniroyal Optoelectronics, LLC,
as a Guarantor
By
-------------------------------------
Title:
Sterling Semiconductor, Inc.,
as a Guarantor
By
-------------------------------------
Title:
Uniroyal Optoelectronics Service
Company, Inc., as a Guarantor
By
-------------------------------------
Title:
NorLux Corp.,
as a Guarantor
By
-------------------------------------
Title:
Exhibit F
Page 10
Accepted and Agreed to:
EMCORE CORPORATION,
as Lender and as Secured Creditor
By
----------------------------------
Title:
EXHIBIT G
FORM OF SOLVENCY CERTIFICATE
I, the undersigned, the Chief Financial Officer of Uniroyal Technology
Corporation (the "Borrower"), do hereby certify in such capacity and on behalf
of the Borrower that:
1. This Certificate is furnished to the Lender pursuant to Section
4.12(i) of the Credit Agreement, dated as of August __, 2001, among the Borrower
and EMCORE Corporation, as Lender (the "Lender" (such Credit Agreement, as in
effect on the date of this Certificate, being herein called the "Credit
Agreement"). Unless otherwise defined herein, capitalized terms used in this
Certificate shall have the meanings set forth in the Credit Agreement.
2. For purposes of this Certificate, the terms below shall have the
following definitions:
(a) "Fair Value"
The amount at which the assets, in their entirety (on a going
concern basis), of each of the Borrower on a stand-alone
basis, and the Borrower and its Subsidiaries taken as a whole,
would change hands between a willing buyer and a willing
seller, within a commercially reasonable period of time, each
having reasonable knowledge of the relevant facts, with
neither being under any compulsion to act.
(b) "Present Fair Salable Value"
The amount that could be obtained by an independent willing
seller from an independent willing buyer if the assets of each
of the Borrower on a stand-alone basis, and the Borrower and
its Subsidiaries taken as a whole (on a going concern basis),
are sold with reasonable promptness under normal selling
conditions in a current market.
(c) "New Financing"
The Indebtedness incurred or to be incurred by the Borrower
and its Subsidiaries under the Documents and all other
financing contemplated by the Documents (including, without
limitation, the Credit Documents, in each case after giving
effect to the Transaction and all financing contemplated
therewith.
(d) "Stated Liabilities"
The recorded liabilities (including contingent liabilities)
that would be recorded in accordance with generally accepted
accounting principles ("GAAP") of the Borrower and its
Subsidiaries at October 1, 2000 after giving effect to
Transaction, determined in accordance with GAAP consistently
applied, together with (i) the net change in long-term debt
(including current maturities) between October 1, 2000 and the
date hereof and (ii) without duplication, the amount of all
New Financing.
(e) "Identified Contingent Liabilities"
The maximum estimated amount of liabilities reasonably likely
to result from pending litigation, asserted claims and
assessments, guaranties, uninsured risks and other contingent
liabilities of each of the Borrower on a stand-alone basis,
and the Borrower and its Subsidiaries taken as a whole, after
giving effect to the Transaction (exclusive of such contingent
liabilities
Exhibit G
Page 2
to the extent reflected in Stated Liabilities), as identified
and explained in terms of their nature and estimated magnitude
by responsible officers of the Borrower or any of its
Subsidiaries or that have been identified as such by an
officer of the Borrower or any of its Subsidiaries.
(f) "Will be able to pay its Stated Liabilities and Identified
Contingent Liabilities, as they mature"
For the period from the date hereof through the stated
maturity of all the New Financing, each of the Borrower on a
stand-alone basis, and the Borrower and its Subsidiaries taken
as a whole, will have sufficient assets and cash flow to pay
its Stated Liabilities and Identified Contingent Liabilities
as those liabilities mature or otherwise become payable.
(g) "Does not have Unreasonably Small Capital"
For the period from the date hereof through the stated
maturity of all the New Financing, each of the Borrower on a
stand-alone basis, and the Borrower and its Subsidiaries taken
as a whole, after consummation of the Transaction and all
Indebtedness being incurred or assumed and Liens created by
the Borrower and its Subsidiaries in connection therewith, is
a going concern and has sufficient capital to ensure that it
will continue to be a going concern for such period and to
remain a going concern.
3. For purposes of this Certificate, I, or other officers of the
Borrower and its Subsidiaries under my direction and supervision, have performed
the following procedures as of and for the periods set forth below.
(a) I have reviewed the financial statements (including the pro
forma financial statements) referred to in Section 5.05 of the
Credit Agreement.
(b) I have made inquiries of certain officials of the Borrower and
its Subsidiaries who have responsibility for financial and
accounting matters regarding (i) the existence and amount of
Identified Contingent Liabilities associated with the business
of the Borrower and its Subsidiaries and (ii) whether the
unaudited pro forma consolidated financial statements referred
to in paragraph (a) above are in conformity with GAAP applied
on a basis substantially consistent with that of the audited
financial statements as at October 1, 2000.
(c) I have knowledge of and have reviewed to my satisfaction the
Credit Documents and the other Documents, and the respective
Schedules and Exhibits thereto (including any fairness
opinions delivered in connection therewith).
(d) With respect to Identified Contingent Liabilities, I:
1. inquired of certain officials of the Borrower and its
Subsidiaries who have responsibility for legal, financial and
accounting matters as to the existence and estimated liability
with respect to all contingent liabilities known to them; and
2. confirmed with officers of the Borrower and its Subsidiaries
that, to the best of such officers' knowledge, (i) all
appropriate items were included in Stated Liabilities or the
listing of Identified Contingent Liabilities and that (ii) the
amounts relating thereto were the maximum estimated amount of
liabilities reasonably likely to result therefrom as of the
date hereof.
(e) I have examined the Projections which have been delivered to
the Lenders and considered the effect thereon of any changes
since the date of the preparation thereof on the results
projected
Exhibit G
Page 3
therein. After such review, I hereby certify that in my
opinion the Projections are reasonable and the Projections
support the conclusions contained in paragraph 4 below.
(f) I have made inquiries of certain officers of the Borrower and
its Subsidiaries who have responsibility for financial
reporting and accounting matters regarding whether they were
aware of any events or conditions that, as of the date hereof,
would cause either the Borrower on a stand-alone basis, or the
Borrower and its Subsidiaries taken as a whole, in either case
after giving effect to the Transaction and the related
financing transactions (including the incurrence of the New
Financing), to (i) have assets with a Fair Value or Present
Fair Salable Value that are less than the sum of Stated
Liabilities and Identified Contingent Liabilities; (ii) have
Unreasonably Small Capital; or (iii) not be able to pay its
Stated Liabilities and Identified Contingent Liabilities as
they mature or otherwise become payable.
4. Based on and subject to the foregoing, I, in my capacity as the
Chief Financial Officer of the Borrower, hereby certify on behalf of the
Borrower that, after giving effect to the Transaction and the related financing
transactions (including the incurrence of the New Financing), it is my informed
opinion that (i) the Fair Value and Present Fair Salable Value of the assets of
each of the Borrower on a stand-alone basis, and the Borrower and its
Subsidiaries taken as a whole, exceed its Stated Liabilities and Identified
Contingent Liabilities; (ii) neither the Borrower on a stand-alone basis, and
the Borrower and its Subsidiaries taken as a whole, has Unreasonably Small
Capital; and (iii) each of the Borrower on a stand-alone basis, and the Borrower
and its Subsidiaries taken as a whole, will be able to pay its Stated
Liabilities and Identified Contingent Liabilities, as they mature or otherwise
become payable.
* * *
Exhibit G
Page 4
IN WITNESS WHEREOF, I, solely in my capacity as Chief Financial Officer
of the Borrower, have hereto set my hand this ___ day of _________, 2001.
UNIROYAL TECHNOLOGY CORPORATION
By
--------------------------------
Title: Executive Vice President,
Treasurer and Chief
Financial Officer
EXHIBIT H
FORM OF INTERCOMPANY NOTE
[Date]
FOR VALUE RECEIVED, [NAME OF PAYOR] (the "Payor"), hereby promises to
pay on demand to the order of _____________ or its assigns (the "Payee"), in
lawful money of the United States of America in immediately available funds, at
such location in the United States of America as the Payee shall from time to
time designate, the unpaid principal amount of all loans and advances made by
the Payee to the Payor.
The Payor promises also to pay interest on the unpaid principal amount
hereof in like money at said office from the date hereof until paid at such rate
per annum as shall be agreed upon from time to time by the Payor and Payee.
Upon the commencement of any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar proceeding of any jurisdiction relating to the Payor, the unpaid
principal amount hereof shall become immediately due and payable without
presentment, demand, protest or notice of any kind in connection with this Note.
This Note evidences certain permitted intercompany Indebtedness
referred to in the Credit Agreement, dated as of August __, 2001 (as amended,
modified or supplemented from time to time, the "Term Credit Agreement"),
between Uniroyal Technology Corporation (the "Company"), and EMCORE Corporation,
as Lender, and is subject to the terms of the Term Credit Agreement.
The Payee is hereby authorized to record all loans and advances made by
it to the Payor (all of which shall be evidenced by this Note), and all
repayments or prepayments thereof, in its books and records, such books and
records constituting prima facie evidence of the accuracy of the information
contained therein.
All payments under this Note shall be made without offset, counterclaim
or deduction of any kind.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
[NAME OF PAYOR]
By:
--------------------------------------
Name:
Title:
Pay to the order of
------------------------------
[NAME OF PAYEE]
By:
--------------------------------------
Name:
Title:
EXHIBIT I
SHAREHOLDER SUBORDINATED NOTE
$_______________ New York, New York
[Date]
FOR VALUE RECEIVED, UNIROYAL TECHNOLOGY CORPORATION, a New York
corporation (the "Company"), hereby promises to pay to __________ or [his] [her]
[its] assigns (the "Payee"), in lawful money of the United States of America in
immediately available funds, at ____________________________, the principal sum
of _____________ DOLLARS, which amount shall be payable on ______________.4
[The Company promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at a
rate per annum equal to _______________, such interest to be paid
[semi-annually] [annually] on _____________________ [and ___________] of each
year and at maturity hereof.]
This Note is subject to voluntary prepayment, in whole or in part, at
the option of the Company, without premium or penalty.
This Note is one of the Shareholder Subordinated Notes referred to in
the Credit Agreement, dated as of August __, 2001, by and among the Company and
EMCORE Corporation, as Lender (as amended, modified, supplemented, extended,
restated, refinanced, replaced or refunded from time to time, the "Credit
Agreement") and shall be subject to the provisions thereof. Unless otherwise
defined herein, all capitalized terms used herein or in Annex A attached hereto
and defined in the Credit Agreement shall have the meaning assigned to such term
in the Credit Agreement.
Notwithstanding anything to the contrary contained in this Note, the
Payee understands and agrees that the Company shall not be required to make, and
shall not make, any payment of principal, interest or other amounts on this Note
to the extent that such payment is prohibited by the terms of any Senior
Indebtedness (as defined in Annex A attached hereto), including, but not limited
to, Sections 7.03 and 7.04 of the Credit Agreement.
This Note, and the Company's obligations hereunder, shall be
subordinate and junior to all indebtedness of the Company constituting Senior
Indebtedness (as defined in Section 1.07 of Annex A attached hereto) on the
terms and conditions set forth in Annex A attached hereto, which Annex A is
herein incorporated by reference and made a part hereof as if set forth herein
in its entirety.
The Company hereby waives presentment, demand, protest or notice of any
kind in connection with this Note.
------------------------
4 Insert a date on or after December 31, 2011.
Exhibit I
Page 2
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
UNIROYAL TECHNOLOGY CORPORATION
By:
----------------------------------
Title:
ANNEX A
Section 1.01. Subordination of Liabilities. Uniroyal Technology
Corporation (the "Company"), for itself, its successors and assigns, covenants
and agrees, and each holder of the Note to which this Annex A is attached (the
"Note") by its acceptance thereof likewise covenants and agrees, that the
payment of the principal of, interest on, and all other amounts owing in respect
of, the Note (the "Subordinated Indebtedness") is hereby expressly subordinated,
to the extent and in the manner hereinafter set out, to the prior payment in
full in cash of all Senior Indebtedness (as defined in Section 1.07 of this
Annex A). The provisions of this Annex A shall constitute a continuing offer to
all persons and other entities who, in reliance upon such provisions, become
holders of, or continue to hold, Senior Indebtedness, and such persons and other
entities are made obligees hereunder the same as if their names were written
herein as such, and they and/or each of them may proceed to enforce such
provisions.
Section 1.02. Company Not to Make Payments with Respect to Subordinated
Indebtedness in Certain Circumstances. (a) Upon the maturity of any Senior
Indebtedness (including interest thereon or fees or any other amounts owing in
respect thereof), whether at stated maturity, by acceleration or otherwise, all
Obligations (as defined in Section 1.07 of this Annex A) owing in respect
thereof shall first be paid in full in cash before any payment of any kind or
character, whether in cash, property, securities or otherwise, is made on
account of the Subordinated Indebtedness.
(b) Until all Senior Indebtedness has been paid in full in cash and all
commitments in respect of such Senior Indebtedness have been terminated, the sum
of all payments in respect of the Note (including principal and interest),
together with the sum of (i) all payments made under all other Shareholder
Subordinated Notes and (ii) all payments made by the Company and its
Subsidiaries to repurchase stock or options to purchase stock of the Company
held by officers and employees of the Company and its Subsidiaries shall not
exceed at any time that amount permitted by the terms of the respective issue of
Senior Indebtedness.
(c) The Company may not, directly or indirectly, make any payment of
any Subordinated Indebtedness and may not acquire any Subordinated Indebtedness
for cash, property, securities or otherwise until all Senior Indebtedness has
been paid in full in cash if any default or event of default under the Credit
Agreement (as defined in Section 1.07 of this Annex A) or any other issue of
Senior Indebtedness is then in existence or would result therefrom. Each holder
of the Note hereby agrees that, so long as any such default or event of default
in respect of any issue of Senior Indebtedness exists, it will not xxx for, or
otherwise take any action to enforce the Company's obligations to pay, amounts
owing in respect of the Note. Each holder of the Note understands and agrees
that to the extent that clause (b) of this Section 1.02 reduces the payment of
interest and/or principal which would otherwise be payable under the Note but
for the limitations set forth in such clause (b), such unpaid amount shall not
constitute a payment default under the Note and the holder of the Note may not
xxx for, or otherwise take action to enforce the Company's obligation to pay
such amount, provided that such unpaid principal or interest shall remain an
obligation of the Company to the holder of the Note pursuant to the terms of the
Note.
(d) In the event that, notwithstanding the provisions of the preceding
subsections (a), (b) and (c) of this Section 1.02, the Company (or any Person on
behalf of the Company) shall make any payment of any kind or character on
account of the Subordinated Indebtedness at a time when payment is not permitted
by said subsection (a), (b) or (c), such payment shall be held by the holder of
the Note, in trust for the benefit of, and shall be paid forthwith over and
delivered to, the holders of Senior Indebtedness or their representative or the
trustee under the indenture or other agreement pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, for application pro rata to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in accordance with the terms of such Senior Indebtedness,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness. Without in any way modifying the provisions of
this
Annex A
Page 2
Annex A or affecting the subordination effected hereby if the hereafter
referenced notice is not given, the Company shall give the holder of the Note
prompt written notice of any event which would prevent payments under Section
1.02(a), (b) or (c) hereof.
Section 1.03. Subordination to Prior Payment of All Senior Indebtedness
on Dissolution, Liquidation or Reorganization of Company. Upon any distribution
of assets of the Company upon dissolution, winding up, liquidation,
reorganization or similar proceeding of the Company (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full in cash of all Senior Indebtedness (including,
without limitation, post-petition interest at the rate provided in the
documentation with respect to the Senior Indebtedness, whether or not such
post-petition interest is an allowed claim against the debtor in any
bankruptcy or similar proceeding) before the holder of the Note is entitled
to receive any payment of any kind or character on account of the
Subordinated Interest;
(b) any payment or distributions of assets of the Company of any kind
or character, whether in cash, property or securities to which the holder of
the Note would be entitled except for the provisions of this Annex A, shall
be paid by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or other trustee or agent, directly to the holders of
Senior Indebtedness or their representative or representatives, or to the
trustee or trustees under any indenture under which any instruments
evidencing any such Senior Indebtedness may have been issued, to the extent
necessary to make payment in full in cash of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of this
Section 1.03, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, shall be
received by the holder of the Note on account of Subordinated Indebtedness
before all Senior Indebtedness is paid in full in cash, such payment or
distribution shall be received and held in trust for and shall forthwith be
paid over to the holders of the Senior Indebtedness remaining unpaid or
their representative or representatives, or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, for application to the payment of such
Senior Indebtedness until all such Senior Indebtedness shall have been paid
in full in cash, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
Without in any way modifying the provisions of this Annex A or
affecting the subordination effected hereby if the hereafter referenced notice
is not given, the Company shall give prompt written notice to the holder of the
Note of any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency or receivership proceedings or upon
assignment for the benefit of creditors or otherwise).
Section 1.04. Subrogation. Subject to the prior payment in full in cash
of all Senior Indebtedness, the holder of the Note shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Note shall be paid in full, and for the purpose
of such subrogation no payments or distributions to the holders of the Senior
Indebtedness by or on behalf of the Company or by or on behalf of the holder of
the Note by virtue of this Annex A which otherwise would have been made to the
holder of the Note shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the holder of the Note, be deemed to be
payment by the Company to or on account of the Senior Indebtedness, it being
understood
Annex A
Page 3
that the provisions of this Annex A are and are intended solely for the purpose
of defining the relative rights of the holder of the Note, on the one hand, and
the holders of the Senior Indebtedness, on the other hand.
Section 1.05. Obligation of the Company Unconditional. Nothing
contained in this Annex A or in the Note is intended to or shall impair, as
between the Company and the holder of the Note, the obligation of the Company,
which is absolute and unconditional, to pay to the holder of the Note the
principal of and interest on the Note as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the holder of the Note and creditors of the Company other
than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the holder of the Note from exercising all remedies otherwise
permitted by applicable law upon an event of default under the Note, subject to
the provisions of this Annex A and the rights, if any, under this Annex A of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy. Upon any distribution of
assets of the Company referred to in this Annex A, the holder of the Note shall
be entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the holder of the
Note, for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other indebtedness
of the Company, the amount thereof or payable thereon, the amount of amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Annex A.
Section 1.06. Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act in good faith by
any such holder, or by any noncompliance by the Company with the terms and
provisions of the Note, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holder of
the Note with respect hereto, at any time or from time to time and in their
absolute discretion, change the manner, place or terms of payment of, change or
extend the time of payment of, or increase, renew or alter, any Senior
Indebtedness or amend, modify or supplement any agreement or instrument
governing or evidencing such Senior Indebtedness or any other document referred
to therein, or exercise or refrain from exercising any other of their rights
under the Senior Indebtedness including, without limitation, the waiver of
default thereunder and the release of any collateral securing such Senior
Indebtedness, all without notice to or assent from the holder of the Note.
Section 1.07. Senior Indebtedness. The term "Senior Indebtedness" shall
mean all Obligations (as defined below) (i) of the Company under, or in respect
of, the Credit Agreement (as amended, modified, supplemented, extended,
restated, refinanced, replaced or refunded from time to time, the "Credit
Agreement"), dated as of August __, 2001, by and among the Company and EMCORE
Corporation, as Lender, and the other Credit Documents (as defined in the Credit
Agreement), and any renewal, extension, restatement, refinancing or refunding
thereof, whether by the same or any other agent, lender or group of lenders,
(ii) of the Company in respect of any other indebtedness unless the terms of
such indebtedness expressly provide that it shall not be "Senior Indebtedness"
for purposes of the Note. As used herein, the term "Obligation" shall mean any
principal, interest, premium, penalties, fees, expenses, indemnities and other
liabilities and obligations payable under the documentation governing any Senior
Indebtedness (including post-petition interest at the rate provided in the
documentation with respect to such Senior Indebtedness, whether or not such
interest is an allowed claim against the debtor in any bankruptcy or similar
proceeding).
Exhibit J
CONTROL AGREEMENT
August___, 2001
First Union National Bank
[address line 1]
[address line 2]
Gentlemen:
We refer to account number DDA 2090002593219 maintained with you,
as well as all other accounts that may from time to time be maintained with you
(including any of your branches, affiliates or subsidiaries) (all such accounts
are herein referred to as the "Account") by Uniroyal Optoelectronics, LLC (the
"Company") and into which moneys, instruments and other property are deposited
from time to time. The Company has granted to EMCORE Corporation, as Assignee
(the "Assignee") for its own benefit under, and as defined in, that certain
Security Agreement, dated as of August ___, 2001, among the Company and the
Assignee (as amended, modified or supplemented from time to time, the "Security
Agreement"), a security interest in certain assets and properties of the
Company, including, among other things, the Account, all moneys, instruments and
other property deposited therein and all certificates or other instruments, if
any, representing or evidencing the Account (such Account, together with all
such moneys, instruments, other property, certificates and other instruments,
are herein called the "Account Assets").
By signing this letter agreement, you agree that from the date
hereof and until this letter agreement is terminated in accordance with the
terms hereof, each Account shall be under the exclusive dominion and control of
the Assignee and all moneys, instruments and other property of the Company
deposited in each Account shall be held, subject to, and for the benefit of, the
security interest of the Assignee. In addition, you hereby agree to comply with
instructions originated by the Assignee directing dispositions of any and all
Account Assets without further consent by the Company, provided that until such
time as you are notified by the Assignee to the contrary, you may comply with
instructions originated by the Company with respect to dispositions of the
Account Assets.
You waive and agree not to assert, claim or endeavor to
exercise, and by executing this letter agreement bar and estop yourself from
asserting, claiming or exercising, and you acknowledge that you have not
heretofore received a notice from any other party asserting, claiming or
exercising, any right of setoff, banker's lien or other purported form of claim
with respect to the Account Assets and funds from time to time therein. To the
extent that you have any rights in the Account Assets, you hereby expressly
subordinate all such rights to all rights of the Assignee in the Account Assets.
You may terminate this letter agreement, only upon thirty days'
prior written notice to that effect to the Company and the Assignee, by
canceling the Accounts maintained with you and transferring any and all Account
Assets to the Assignee unless the Company and the Assignee both have agreed in
writing to the contrary.
This letter agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts shall be an original, but all of which shall together
constitute one and the same instrument. The terms and conditions of this letter
agreement may be modified only in writing signed by each of the parties hereto.
This letter agreement represents the authenticated record of the
agreement of the parties hereto.
* * * *
THIS LETTER AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
Very Truly Yours,
UNIROYAL OPTOELECTRONICS, LLC
By:
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Name:
Title:
Acknowledged and agreed to
as of the date first above written:
FIRST UNION NATIONAL BANK
By:
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Name:
Title:
EMCORE CORPORATION, as Assignee
By:
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Name:
Title:
